Slums: How Informal Real Estate Markets Work 9780812292572

Table of contents :
Contents
Preface
PART I. COMPARATIVE PERSPECTIVES
Chapter 1. Urban Governance and Development of Informality in China and India
Chapter 2. Comparative Evidence on Urban Land-Use Regulation Bureaucracy in Developing Countries
Chapter 3. Urban Land Titling: Lessons from a Natural Experiment
PART II. ANTHROPOLOGICAL PERSPECTIVES
Chapter 4. The Formalization of Informal Real Estate Transactions in Rio’s Favelas
Chapter 5. Tenure Regularization Programs in Favelas in Brazil
Chapter 6. Property Markets Without Property Rights: Dharavi’s Informal Real Estate Market
Chapter 7. Periurban Land Markets in the Bangalore Region
PART III. PUBLIC POLICY PERSPECTIVES
Chapter 8. Rehousing Mumbai: Formalizing Slum Land Markets Through Redevelopment
Chapter 9. Tenure Regularization: Process and Experiences in Latin America
Chapter 10. Making a Difference in the Predominantly Informal City
Chapter 11. Informal Land Markets: Perspectives for Policy
Notes
References
List of Contributors
Index
A
B
C
D
E
F
G
H
I
J
L
M
N
O
P
Q
R
S
T
U
V
W
Y
Z

Citation preview

Slums

THE CIT Y IN THE T WENT Y- FIR ST CENTURY Eugenie L. Birch and Susan M. Wachter, Series Editors A complete list of books in the series is available from the publisher.

SLUMS How Informal Real Estate Markets Work

Edited by

Eugenie L. Birch, Shahana Chattaraj, and

Susan M. Wachter

U N I V E R S I T Y O F P E N N S Y LVA N I A P R E S S PHIL ADELPHIA

Copyright © 2016 University of Pennsylvania Press All rights reserved. Except for brief quotations used for purposes of review or scholarly citation, none of this book may be reproduced in any form by any means without written permission from the publisher. Published by University of Pennsylvania Press Philadelphia, Pennsylvania 19104-4112 www.upenn.edu/pennpress Printed in the United States of America on acid-free paper 1 3 5 7 9 10 8 6 4 2

Library of Congress Cataloging-in-Publication Data Slums (2016) Slums : how informal real estate markets work / edited by Eugenie L. Birch, Shahana Chattaraj, and Susan M. Wachter. pages cm — (The city in the twenty-first century) Includes bibliographical references and index. ISBN 978-0-8122-4794-7 (alk. paper) 1. Slums—Case studies. 2. Real property—Case studies. 3. Slums—Brazil—Social aspects.

4. Slums—India—Social aspects.

5. Real property—Brazil—Social aspects. Social aspects. Shahana, editor.

6. Real property—India—

I. Birch, Eugenie Ladner, editor. III. Wachter, Susan M., editor.

II. Chattaraj, IV. Title.

V. Series: City in the twenty-first century book series. HV4028.S58 2016 333.33—dc23 2015030117

CON TEN T S

Preface

vii

PART I. COMPARATIVE PERSPECTIVES

1

Chapter 1. Urban Governance and Development of Informality in China and India

4

Arthur Acolin, Shahana Chattaraj, and Susan M. Wachter

Chapter 2. Comparative Evidence on Urban Land-Use Regulation Bureaucracy in Developing Countries

24

Paavo Monkkonen and Lucas Ronconi

Chapter 3. Urban Land Titling: Lessons from a Natural Experiment

47

Sebastian Galiani and Ernesto Schargrodsky

PART II. ANTHROPOLOGICAL PERSPECTIVES

55

Chapter 4. The Formalization of Informal Real Estate Transactions in Rio’s Favelas

58

Janice E. Perlman

Chapter 5. Tenure Regularization Programs in Favelas in Brazil

83

Patricia Cezario Silva and Yvonne Mautner

Chapter 6. Property Markets Without Property Rights: Dharavi’s Informal Real Estate Market

94

Shahana Chattaraj

Chapter 7. Periurban Land Markets in the Bangalore Region Sai Balakrishnan

107

vi

Contents

PART III. PUBLIC POLICY PERSPECTIVES

121

Chapter 8. Rehousing Mumbai: Formalizing Slum Land Markets Through Redevelopment

125

Vinit Mukhija

Chapter 9. Tenure Regularization: Process and Experiences in Latin America

140

José Brakarz

Chapter 10. Making a Difference in the Predominantly Informal City

155

David Gouverneur

Chapter 11. Informal Land Markets: Perspectives for Policy

177

Bish Sanyal

Notes References List of Contributors Index

195 207 227 233

PREFACE

We live in a rapidly urbanizing world in which population growth is concentrated in the cities and urban regions of the Global South. While many point to the urban-rural tipping point that crested 50  percent in 2007 to mark this as the urban century, equally important is the fact that one-sixth of the world’s population lives in slums or informal settlements.1 Indeed, urban development in Africa, Latin America, and much of Asia has been, and continues to be, characterized by informality. The informal economy, which encompasses all economic activities that are “unregulated by the institutions of society in a legal and social environment in which similar activities are regulated” (Portes, Castells, and Benton 1989), is a source of housing as well as a livelihood for large numbers of urban workers in poor countries, in megacities like Mumbai, Rio, and Lagos. The evolution of the informal economy represents both challenges and opportunities for ensuring that urbanization continues to be associated with economic development in the twenty-first century. Informal settlements go by a variety of names—basti or hutment in India and favela in Brazil—the two countries whose experiences form the heart of this book. These settlements have cropped up without conforming to local land-use regulations and without being listed in government records, official maps, or titling registries. They simply exist in legal limbo. Since these places offer little or no security of tenure, their residents face great difficulties in accessing banking and public ser vices and have difficulty building personal assets through home ownership as they gain financial footholds in a city. Conditions in these settlements may be deplorable, but they do provide a source of affordable housing in growing cities. Informal settlements are conventionally understood to exist within cities and outside the remit of both the market and the state. But informality extends beyond urban slums, in the form of unregulated urban expansion in the countryside or the development of informal industrial districts that

viii

Preface

violate zoning, labor, safety, and environmental regulations even as they produce goods exported to world markets. These encroachments of the informal into rural areas and formal economies, as well as the interdependent nature of formal and informal property markets in areas with valuable real estate, create a gray area between formal and informal. In this volume, we challenge the conventional perception by showing that informal settlements in rapidly growing cities can no longer be assumed to be divorced from local government and market forces but must be understood as complex environments where state policies and market actors play a role. This volume has three sections covering the emergence, functioning, and evolution of informal real estate markets in the Global South. The works in the first section, “Comparative Perspectives,” focus on a comparative economic and policy analysis of informal markets in differing economies ranging from China to India to Brazil. Those in the second section, “Anthropological Perspectives,” employ anthropological and sociological approaches to understand informal market dynamics in cities in Brazil and India. Chapters in the third section, “Public Policy Perspectives,” offer long-term perspectives on public policy design, including developing in situ slum upgrading, adapting new forms of property rights, and craft ing slum redevelopment and urban extension efforts. Overall, the chapters in this volume present some notable success stories, as well as failures, that provide valuable lessons for how informality has been dealt with across cities and countries. Collectively, the volume points to the fact that the formal-informal distinction, while useful, is something of a false dichotomy. As public policy intervenes in the informal market, the outcomes do not necessarily result in formality or its equivalent but rather create entirely new, hybrid systems of real estate, housing, and labor markets that are part of the future of our complex urban world.

Slums

This page intentionally left blank

PA R T I Comparative Perspectives

This page intentionally left blank

T

he chapters in this first section examine informal real estate markets through comparative analyses. The authors examine how these markets are shaped by legal systems governing property rights and national and local policies on public finance and land development regulation. By comparing the experiences of different countries and cities, the chapters in this section seek to answer the question, How do legal and policy variables shape informal spaces? Arthur Acolin, Shahana Chattaraj, and Susan Wachter in “Urban Governance and Development of Informality in China and India” discuss the implications for informal real estate markets deriving from differences in national urban governance systems in these two major economies. The chapter presents a side-by-side comparison of India and China and shows how differences in levels and forms of informality result from their strikingly dissimilar urban governance systems. Paavo Monkkonen and Lucas Ronconi focus on informality outcomes across 600 cities in 150 countries in “Comparative Evidence on Urban Land Use Regulation Bureaucracy in Developing Countries,” with findings that point to the role of regulatory regimes in the development of informal settlements. Using a random control design, within one country, the third chapter takes on the question of the role of land records and titling in informal real estate markets. “Urban Land Titling: Lessons from a Natural Experiment,” by Sebastian Galiani and Ernesto Schargrodsky, takes advantage of a “natural experiment” to compare neighboring settlements in Argentina where one received land title regularization and another did not, with findings for how title regularization affects informal real estate outcomes. By using a comparative perspective, this section identifies the underlying structures that shape informality and its relationship to formal state and local institutions, with innovative findings for understanding the current and likely future evolution of these markets.

CHAPTER 1

Urban Governance and Development of Informality in China and India Arthur Acolin, Shahana Chattaraj, and Susan M. Wachter

India’s Established Informal Settlements Versus China’s Floating Population Urban informality characterizes many settlements at the center and periphery of cities in rapidly urbanizing countries. In these nations, residents lack adequate access to drinking water, sanitation, sewage treatment, health, and education, among other public goods. Informality also encompasses unplanned urbanization at the fringe of urban areas, unregistered economic activity, and illegal construction and development. While other chapters in this volume explore informal housing markets in Latin America and India, this chapter, rather than directly addressing the issue of informal housing, focuses on the comparison of the strikingly different developmental outcomes of China’s and India’s urbanization process as they relate to the provision of local public ser vices and on the forms that informality takes in both countries as a result. Urban informality has been linked to high levels of regulation (de Soto 1989) in the labor market (Djankov and Ramalho 2009) and in the housing market (Monkkonen and Ronconi 2013 and Chapter 2 in this volume). Informality has also been associated with the lack of a governance system to fi nance urban infrastructure (Ingram and Kessides 1994). While urban informality is a response to the need for housing with access to jobs, it is generally associated with limited access to public goods such as water, sanitation, energy, and public schools (Straub 2008).

Governance and Informality in China and India

5

China, while not the focus of this book, represents a major alternative urbanization path to the one observed in India and Latin America. As Amartya Sen points out (2013), China has associated urbanization with broadbased improvements in wages and living standards. Local control and the single focus on economic growth as measured by local gross domestic product (GDP) provided incentives for the provision of infrastructure, with investment in urban infrastructure almost seven times higher in China than in India (McKinsey 2010). China’s government used incentives based on GDP growth for local government officials and its control over land as policy instruments to orient urbanization, resulting in limited levels of urban informality (Mahadevia 2006). Nonetheless, the resulting economic development was obtained at the expense of rural migrants’ access to local public ser vices and with major environmental costs, both of which have long-term welfare implications for all citizens. Indeed, China is not exempt from informality. Public support for land development and important public investments have resulted in the growth of the supply of formal housing and employment for urban residents and rural migrants, although the quality of the units and jobs to which migrants have access is limited and can include dangerous living and working conditions. In contrast, India has experienced slower economic growth and a slower rate of urbanization, accompanied by rising urban poverty rates (although rural poverty levels have declined). Nonetheless, much of the urbanization is happening informally, with neither the provision of adequate infrastructure nor the presence of a strong municipal governance structure. Informal urbanization involves the in situ “urbanization” of rural areas adjacent to cities and along major transport routes, as well as the growth of informal settlements within metropolitan boundaries. The fact that so much of Indian urbanization is informal limits households’ access to public ser vices, including education, infrastructure, and sanitation. In addition, these conditions are likely to limit improvement in broad-based developmental outcomes, such as living standards, wages, and access to jobs in the formal sector. The next section describes China’s and India’s urbanization processes with a focus on how infrastructure investment and local ser vices are financed in both countries. The third section analyzes the impact of governance structures on the development of cities and informality in both countries, while the final section contrasts the challenges faced by India and China in

6

Comparative Perspectives

achieving urban development that balances economic growth and longterm welfare.

Two Urbanization Paths: Settlement Patterns and Infrastructure Development India and China have both experienced sustained urbanization and economic growth over the last decades, but India has lagged behind. As shown in Figure 1.1, in 1980, 20 percent of China’s population was urban compared with 25 percent for India; by 2010 China was 50 percent urban, while India was 30 percent. The differences in the urbanization rate in both countries as of 2010 partly reflect differences in official definitions of urban areas, resulting in an overcounting of China’s urban population that incorporates still rural residents of expanded metropolitan areas and an undercounting of India’s urban population that does not include periurban residents and residents of urbanized villages.1 These official rates of urbanization over the period translate into China adding over 450 million residents to its urban population while India added over 200 million urban residents (an impressive figure as well, even if lagging behind China’s rate of urbanization). Along with the difference in urbanization rates, Figure 1.2 shows the overall GDP growth differential between China and India. Between 1980 and 2010, while India’s GDP increased fivefold, China’s GDP increased more than thirty times. Per capita GDP increased from less than $300 per capita in constant 2010 dollars in both India and China in 1980 to almost $1,500 in India and $4,500 in China in 2010, reflecting tremendous economic improvement for the overall population (Figure 1.3). This section explores the role of infrastructure investment and of the land development process in explaining these differential aggregate outcomes in both countries, while recognizing that of course the situation of different regions and cities varies greatly within each country.2 The relationship between infrastructure investment and economic development has been long recognized, going back to Adam Smith. Transportation infrastructure, in particular, is necessary to enable specialization and trade that lead to the development of economies of scale and important productivity gains (Prud’Homme 2005). The effect of infrastructure on development has been extensively studied, showing its direct effect on GDP as an input in the production function (energy, water) and its indirect effects on development by increasing a system’s overall productivity through increased

60% 50% 40% China India

30% 20% 10% 1980

1990

2000

2010

Figure 1.1. Percentage of the total population of China and India living in urban areas. Source: World Bank, World Development Indicators, 2012.

7,000

$ current billion

6,000 5,000 4,000

China

3,000

India

2,000 1,000 0 1980

1990

2000

2010

Figure 1.2. Gross domestic product of China and India in 2010 U.S. dollars. Source: World Bank, World Development Indicators, 2012.

5,000 4,500 4,000 $ current

3,500 3,000 2,500

China

2,000

India

1,500 1,000 500 0 1980

1990

2000

2010

Figure 1.3. Gross domestic product per capita of China and India in 2010 U.S. dollars. Source: World Bank, World Development Indicators, 2012.

8

Comparative Perspectives

agglomeration economies (Gramlich 1994; Ingram and Kessides 1994; World Bank 1994; Prud’Homme 2005; Straub 2008). Infrastructure investments enable firms to maximize agglomeration gains from urbanization economies across industries and localization economies within an industry (Duranton 1999). Without these investments, the congestion, barriers to industrialization, and cost of communication resulting from insufficient infrastructure limit the economic gains associated with the transition from a rural to an urban society, and the lack of sufficient ser viced land contributes to informal urbanization. Since 1988, China has framed urbanization as one of its top priorities to absorb surplus rural labor and ensure economic growth (World Bank 2014). Massive urbanization is occurring along with infrastructure development, but without the emergence of a large informal sector. At the same time, it has experienced a rapid increase in GDP and a drop in extreme poverty (Table 1.1). High-ranking officials have emphasized the importance of urbanization for China’s sustained development. For example, in 2005, Chen Yuan, governor of the China Development Bank wrote that “urbanization is the most important and enduring force in stimulating consumption and investment in China’s domestic economy. It is also the engine to simultaneously propel China’s economic and social development” (Yuan 2005). Urbanization in China resembles the open-city model characterized by the emergence of new cities in opposition to a primate model in which most of the urban growth occurs in one or a few main existing cities (Zheng, Kahn, and Liu 2010; Li 2011). The value created through development is captured by local governments and is their main source of revenue. This puts them in competition with each other to attract growth, encouraging a race to development that has resulted in the expansion of a large number of cities. For example, the growth in the number of cities with more than a million residents occurred at a much faster pace in China than in India. In 1990, China had thirty-four cities with a population above one million and India had twentythree. By 2010, China had ninety-three cities with a population above one million compared with forty-three in India (Figure 1.4). In addition, urbanization in China is occurring in the context of a fiscally decentralized system despite China being a very centralized country (Weingast 2009). The situation shares some of the characteristics of the model developed by Tiebout (1956), in which the authority given to local communities to control land use and employ taxing powers to fi nance the provision of local ser vices results in local governments acting as efficient ser vice

Table 1.1. Urbanization and Economic Growth China

Population (in millions) Urban population (in millions) GDP ($ current billion) Average annual GDP growth rate (%) GDP per capita (2010 constant $) Poverty at $2 a day (PPP) (% of population)

India

1980

1990

2000

2010

1980

1990

2000

2010

981.2 189.9 189.4 7.8 193.0 97.8 (1981)

1,135.2 300.2 356.9 3.8 314.0 84.6

1,262.6 453.0 1,198.5 8.4 949.0 61.4 (1999)

1,337.7 658.5 5,930.5 10.4 4,433.0 27.2 (2009)

700.1 161.7 189.6 6.7 271.0 N/A

873.8 223.2 326.6 5.5 374.0 83.8 (1988)

1,053.9 291.6 474.7 4.0 450.0 N/A

1,224.6 378.8 1,710.9 10.5 1,397.0 68.8

GDP = gross domestic product; PPP = public-private partnership. Source: World Bank, World Development Indicators.

10

Comparative Perspectives

100 90 80 70 60

China

50

India

40 30 20 10 0 1950

1960

1970

1980

1990

2000

2010

Figure 1.4. The number of cities in China and India that have populations over one million people. Source: World Bank, World Development Indicators, 2012.

providers that compete for growth and invest in infrastructure and public ser vices to attract residents by offering more attractive tax and ser vices levels. In contrast, India has a federal system, which implies a certain level of decentralization, but local governments have no real fiscal autonomy and generally depend on central government funding to finance public investments, resulting in a severe infrastructure shortage. There is a clear contrast in the share of public revenue and expenditure that takes place at the local level in India and China. While in China, 50 percent of public expenditure and 25 percent of revenue are controlled by the lower tier of government, in India, 33 percent of expenditure and only 3 percent of revenue are thus controlled (Table 1.2).3 The decentralization of local taxation, development rights control, and ser vices provision in China has had a strong impact on local outcomes, even if municipal governments do not have real autonomy from the central government (Weingast 2009). While determined by the central government, the incentives for local officials to promote growth have created a system in which local governments compete for development in order to receive benefits from urban expansion through increased revenue, in par ticu lar by monetizing land assets and career advancement for local officials. The result are progrowth policies with a heavy focus on the provision of infrastructures as can be seen in such cities as Shanghai and Beijing, which have devoted over 6 percent of their regional GDP to urban infrastructure over the last decade,

Governance and Informality in China and India

11

Table 1.2. Share of Total Public Expenditure and Revenue by Level of Government Share of Total Public Expenditure (%)

Share of Total Public Revenue (%)

Subnational

Upper Tier

Lower Tier

Subnational

Upper Tier

Lower Tier

66 70

33 20

33 50

33 40

30 15

3 25

India (2004) China (2005) Source: UN-Habitat, 2013.

as compared with an average of between 3 and 4 percent of GDP in developing countries (Su and Zhao 2006). Moreover, the massive migration of workers from rural to urban areas in China takes place in a segmented institutional context in which rural migrants do not have full access to the benefit of moving to cities (especially the larger ones) due to the Hukou system. The Hukou permits are part of China’s household registration system that controls where individuals are entitled to live and have access to ser vices. In this system, rural migrants with a rural Hukou are able to move to cities but are not entitled to city ser vices (health care, schooling) and do not have full civic rights in the cities in which they settle. By contrast, residents with a Hukou for the city they live in receive the full benefits of the increase in the provision of public goods (Chan and Zhang 1999; Gottschalch 2013). It is estimated that while over 50 percent of Chinese live in cities, only 36 percent are registered as urban residents. That means that as of 2013, about 270 million people, or 20 percent of the overall population, are permanent urban residents but do not have full access to public ser vices because of their lack of an urban Hukou (Johnson 2014). Many of the migrants with a rural Hukou live in formal housing provided by their employers or in “urban villages,” former villages that have been absorbed by urban areas but that keep their collective ownership structures, allowing villagers to build as densely as they want and rent out rooms to migrants. These accommodations are often of poor quality, consisting of overcrowded dormitories without basic facilities (Chan 2009). Thus, although China has lower rates of urban informality, the outcomes for those who are

12

Comparative Perspectives

rural-to-urban migrants can be similar to those experienced by Latin American and Indian urban dwellers in the informal sector. Hukou reform has long been an object of attention for China’s central and local governments (Chan and Li 1999; Chan 2009), and the current Chinese administration has announced further efforts to reform the Hukou system with the goal to deliver urban Hukou to a hundred million rural migrants by 2020 (Xinhua 2014). The details of a comprehensive reform to grant them full access to cities remain uncertain despite initiatives to tackle this issue at the provincial level, such as in Sichuan (Antholis 2013; World Bank 2014). However, such drawbacks do not prevent rural migrants from moving to cities in large numbers to take advantage of employment opportunities. City life is seen as a way to improve living conditions over life in the countryside, as shown by the large, floating population of rural-to-urban migrants. Thus, the main effects of the Hukou system in relationship to urbanization and economic development are the creation of a segmented labor market with limited capacity to increase human capital for rural Hukou holders (Heckman and Yi 2012) and a loss of potential agglomeration economies due to migration restrictions, resulting in losses in economic growth (Au and Henderson 2006).4 The capacity and incentive of local governments to mobilize resources to provide public goods and the elastic supply feature of the open-city model, combined with restrictions on rights to move to the city, illustrate the different form of informality in China. Local governments are able to fund the provision of ser vices and infrastructure, and are incentivized to do so in order to support urban growth, which is one of the main criteria on which they are evaluated by the central government. But the focus on growth has until recently neglected the social and environmental consequences of urbanization. The urbanization plan for the 2014–2020 period is presenting itself as an attempt “to steer the country’s urbanization onto a humancentered and environmentally friendly path” (Xinhua 2014). The ability of the central government to manage a slower economic growth rate and provide access to public ser vices to current holders of rural Hukou living in cities, as well as limit the environmental damage associated with its current development path, will determine the continued success of China’s rapid urbanization; still, successful urbanization is a high priority for the government (Johnson 2013; Xinhua 2014). In India, in contrast, urbanization has only recently become a priority in the development agenda, and India has not mobilized the necessary resources

Governance and Informality in China and India

13

to organize urban development and provide sufficient urban infrastructure. This underinvestment is a factor in the lower economic growth observed in India as compared with China. Gupta and colleagues (2009) estimate that this lack of sufficient investment is responsible for a decrease in annual GDP growth of 1.1 percentage point. According to a report by McKinsey (2010), India spends $17 per capita per year on urban infrastructure compared with $116 per capita in China. The report estimates that an annual level of expenditure of $100 per capita is required in order to provide the $1.2 trillion in investment in urban infrastructure estimated to be needed over the next twenty years (plus an additional $1 trillion required for operating expenses). Among the key reasons for these vastly different levels of investment is that unlike in China, where local governments are accountable for growth, urban local bodies in India still have limited policy autonomy or capacity for local economic development.5 Urban policy making and administration in most Indian states remains centralized at the subnational or provincial level. Local governments in small and medium towns are dependent on central and state government transfers, and have limited revenue-raising capacity through taxation or debt financing. Local governments in India are less likely to own land and use land development as a source of financing. The lack of infrastructure and the complicated nature of land acquisition and development also contribute to the informal nature of much of the new urban areas being developed in India. These two factors, along with the country’s regulatory burden, result in high transportation, utility, and land costs that have been identified as part of the reason India is not experiencing massive industrialization (Bradsher 2013). In the 1980s and 1990s, China’s creation of special economic zones contributed to the growth of its industrial sector. It structured its economic development strategy around large, exportoriented industrial zones that had received special incentives through infrastructure investments, large serviced parcels, and reduced custom and income taxes. As of 2011, China’s industrial sector represented 47 percent of its GDP (30 percent for manufacturing alone) compared with 27 percent for India (14 percent for manufacturing alone). In contrast, ser vices represented 56 percent of India’s GDP in 2011 compared with 43 percent in China (World Bank 2012b). That a large ser vice sector developed without having experienced a high level of industrialization and urbanization is unique to India and creates a number of challenges. In the absence of a large, export-oriented manufacturing sector, fewer formal jobs are available to low-skilled rural migrants in India than in China.

14

Comparative Perspectives

As a result, most migrants end up fi nding employment in the informal sector, such as working in small factories and workshops, which limits the productivity and quality-of-life benefits generally associated with the rural-to-urban transition. In addition, instead of a consensus for reforms to enable the funding of infrastructure and easier land aggregation to ensure that urbanization is associated with improving quality of life for migrant workers and increased economic productivity (Desmet et al. 2012), there is still support in India to limit urbanization.6 India’s rapid economic growth in recent years has not been accompanied by a concomitant growth in formal employment. Absolute employment in “organized manufacturing” declined over the past decade (Chandrasekhar and Ghosh 2007b; Tendulkar 2003). Self-employment, on the other hand, increased rapidly from 2000 to 2005, reversing a declining trend over the previous two decades (Chandrasekhar and Ghosh 2007a). Contract work and casual labor have also increased. As a result, India, unlike China, has not experienced significant growth in real wages despite high levels of GDP and productivity growth (ILO 2013).7 While India has made some significant inroads in poverty reduction,8 wage levels remain low for a majority of workers, and India’s progress in terms of human development indicators (for example, expanding access to basic ser vices such as water and sanitation) is modest in comparison with China (Drèze and Sen 2013). In China, urbanization is associated with broad-based improvements in wages and living standards. Urban poverty in India is over 25 percent; some 81 million people live in urban areas on incomes that are below the poverty line (UNDP 2009).9 A far larger number are above the poverty line but lack access to basic ser vices. These urban residents live and work in the informal economy. The informal economy in Indian cities is heterogeneous and diverse, and encompasses both entrepreneurial as well as exploitative forms of economic activity (Chen 2005; Portes, Castells, and Benton 1989; Brugmann 2013). Nevertheless, the pervasiveness of informality in urban employment and development has serious negative consequences. The workers in the Dharavi slum’s now celebrated (Glaeser 2009) informal manufacturing workshops and in small factories “outsourced” to urbanizing rural areas (D. Chattaraj 2010; Heller 2000) make low earnings, often below state-mandated minimum wages, and work in conditions that violate occupational safety, labor, environmental, and building regulations. They are likely to lack the benefits,

Governance and Informality in China and India

15

social security, and legal protections available to workers in formal employment (Breman 2013). Furthermore, widespread informality weakens the fiscal and regulatory capacity of the local state. Informality is associated with weak state capacity, such as in India where city governments are unable or unwilling to enforce regulations (S. Chattaraj 2012).10 The lack of regulatory capacity may result in serious consequences when informal processes of urban growth extend to high-rise buildings and factory complexes, as the tragedy of recent collapses in Dhaka and Mumbai have shown. Informal and unregulated urbanization is also linked to negative environmental and social consequences. Illegal and environmentally destructive sand mining in riverbeds and coastal areas has also been spurred by unregulated urban growth.11 Urbanization data from the 2011 Census of India shows an increase in India’s urban growth rate, as well as for the first time a greater absolute increase in urban population growth (91 million) than in rural (90 million) (Census of India 2011). Much of the urbanization in India is occurring outside the regulatory jurisdictions of municipal governments. This includes informal urbanization in adjacent districts of large cities but also the in situ urbanization of rural areas. In fact, population growth within the administrative limits of large metropolitan cities in India in the last decade has declined, while surrounding rural regions have shown higher growth (Pradhan 2012). In situ rural urbanization, according to the 2011 census, accounted for 26 percent to 29.5 percent of the urban growth between 2001 and 2011, in the form of “census towns” that meet the density, employment (over 75 percent of the male population is engaged in nonfarm employment), and size criteria of urban settlements but remain governed under rural arrangements (Pradhan 2012). Nonetheless, these census towns do not have the capacity to fund infrastructure. Distributed throughout the countryside along major transport routes, they urbanize in an unplanned manner without the development of municipal governance institutions to provide urban services such as water supply, sanitation, waste management, public health, and paved roads. In situ urbanization or urban transformation within rural areas rather than through migration into cities and towns is also common in China. However, the major difference in China is that urbanizing rural areas are regularly incorporated within larger city boundaries so that urban infrastructure and ser vices can be provided (Zhu 2012; Gottschalch 2013). The slower, more informal urbanization of India has implications for the country’s development,

16

Comparative Perspectives

given that high levels of urbanization have been shown to correlate positively with high levels of economic development.12

Financing in India Versus China The structure of urban governance, in particular the relationship between the central and subnational levels of government, plays a central role in shaping financing of public goods and the urbanization process. China and India are markedly different in their macroinstitutional setup: China’s system, as we have seen, is strongly centralized at the upper reaches of policy making but administratively decentralized down to the local level. India’s system is federal and thus decentralized in terms of policy making and administration at the provincial level, but it lacks fiscal powers at the local level. In India, local governments lack the authority, resources, and capacity to undertake progrowth measures due to strong control at the state (provincial) level over urban policy and implementation. Efforts to decentralize government to the local level through two constitutional amendments, the 73rd Amendment for villages, and the 74th Amendment for cities and towns, have been met with mixed success. Rural decentralization to village panchayats (elected village councils) has been more effective than decentralization to urban local bodies (ULBs). This section expands the chapter’s comparative analysis by addressing the mechanisms of finance in China and India. In par ticular, it looks at the influence of responsibilities and financing structures of local governments on urbanization outcomes. In China’s case, incentivizing pro-growth policies enabled rapid urban development; in India’s case, it fostered largely informal urbanization. In China, land reforms in 1988 generated revenue for local governments to invest in infrastructure and provided benefits from enabling land development (Yeh 2011). The reform of the tax assignment system in 1994 shifted more revenues to the central government while shifting more expenditure responsibilities to local levels of government, increasing their need to develop extrabudgetary funding through development fees (Su and Zhao 2007). These reforms and subsequent ones in 1997 and 2002 incentivized subnational governments (defined as provinces, municipalities, counties, and townships) to take control of their revenue sources in order to finance their expenditures. The reforms led to a sharp increase in both central and subnational fiscal

Governance and Informality in China and India

17

revenue, with a large portion of the central revenue being transferred to the subnational level in the form of transfer payments (Su and Zhao 2007). As of 2010, subnational expenditures represented 80 percent of all public expenditures in China (Fardoust and Ravishankar 2013). Subnational expenditures cover local government administration, local capital construction, provision and maintenance of local ser vices (water and sanitation, urban gas, local roads and highways, transit), repair and operation of necessary urban infrastructure, management of local state-owned enterprises, primary and secondary schools (plus some support for higher education), health care and hospitals, price subsidies, social protection, environmental protection, and local and regional economic development (Su and Zhao 2007). Local governments in China fi nance expenditures through a mix of on-budget revenue shared with the central government and “formal offbudget revenue.” The latter is agreed on by the central government but not shared and reported. Local governments also receive revenue from nonauthorized fees and taxes. Among the revenue over which local governments have control, a number of off-budget revenue sources are used for infrastructure financing such as land leasing, development fees, and asset income. Local revenues increase with development, enabling local governments to capture directly the gains from their investments that facilitate such development. Direct revenue from central transfer payments, user fees, ser vice tariffs, and taxes administered by local governments are not sufficient to finance the level of infrastructure that would sustain the urbanization pace observed over the last two decades. At the same time, local governments are technically prohibited from borrowing in China. As a result, urban development and investment companies, wholly-owned subsidiaries set up by local governments to hold infrastructure-related assets, have become the main way to obtain financing for infrastructure from banks, with the local government guaranteeing that it will use all its revenue-raising power to repay the loans (Su and Zhao 2006).13 The use of urban development and investment companies and the practice of selling land for development to complement limited local governments revenues and pay for investment in the provision of local ser vices have allowed Chinese cities to dramatically increase the provision of infrastructure and ser vices and accommodate a fast pace of urbanization.14 However, reliance on the capture of development gains and shadow banking represents significant risks as the path of growth slows down going forward. Stable, longterm revenue sources, such as property tax, need to be implemented to pay

18

Comparative Perspectives

back these investments and ensure the provision of local urban ser vices in the long run. In India, local responsibilities were formally enhanced by the 73rd and 74th Amendments to the Indian Constitution (1992) that established a third tier of government below the subnational level, of village panchayats and urban local bodies (see Balakrishnan, Chapter 7). Before the amendments, urban local governments in India were creatures of the state government, which could extend or control their functions through executive decisions rather than legislation (Mathur 2007). While city administrations such as the Bombay Municipal Corporation have a long history in India, most cities were governed, planned, and financed through provincial line departments. The 74th Amendment, which pertains to urban local bodies, provided for the constitution of three types of municipalities for different sizes of cities and towns, the devolution of greater functional responsibilities and financial powers to local governments, representation of women and disadvantaged groups, regular and fair conduct of municipal elections, and the creation of new institutions such as wards committees, district planning committees, metropolitan planning committees, and state finance commissions. While the 74th Amendment provides a basis for state legislatures to reform municipal legislation, the details have been left to the discretion of various state governments, and the extent to which they enact its recommendations varies from state to state (Mathur 2007). India is projected to have over four thousand urban local governments by 2011. But, notwithstanding the 74th Amendment, there is little evidence that powers have been decentralized to these bodies to a significant extent except in a few states such as Kerala and Goa. A nationwide review of the implementation of the 74th Amendment’s provisions found that its recommendations were not accepted by all states, and even where accepted, were not always enacted into legislation to enable devolution of power or resource sharing. Even where power has been devolved to a significant extent, “in several states, there exists a problem of ineffective participation in the decisionmaking process, delays in the transfer of funds to the municipalities despite constitution of State Finance Commissions, poor recovery from various tax and non-tax sources despite devolution of powers” (Mathur 2007: 3). As cities become more important sources of political and economic power and influence, state-level administrations retain control over policy making related to land, urban planning and development, industrial policy, housing policy, policing, transport policy, and finance. Urban local governments are

Governance and Informality in China and India

19

given responsibility for the delivery of local ser vices and local-level planning. In terms of their formal division of powers, provincial-level parastatal agencies and local governments overlap in major cities in the areas of urban planning and development regulation, slum improvement, urban poverty alleviation, transport, and environment and forestry. Thus, unlike in China, where local governments are squarely focused on promoting growth and urban development, in India, they have a plethora of functions but limited capacity and resources, especially outside the municipal corporations of large cities. While land development is a major source of finance for local governments in China (most of which do not levy property taxes), the major revenue source for city governments in India is the property tax. Earlier octroi taxes, levied on the entry of outside goods into a local jurisdiction, were a significant revenue source but have largely been abolished following urban reforms. Some provincial administrations have abolished residential property tax, starving local governments of resources (Rao and Bird 2011). “Urban local bodies have proved unable (or unwilling) to effect periodic revision of property values”; thus, rising property values as a result of development do not translate into a proportionately growing tax base. Intergovernmental transfers from the provincial to local governments are inadequate, and “they are also generally ad hoc and poorly designed and targeted” (Rao and Bird 2011: 23). India’s urban local governments are also unable to raise funds on the debt market to finance infrastructure by issuing municipal bonds. In this context, public-private partnerships (PPPs) are seen as an important mechanism to finance infrastructure, but are more likely to work on lucrative large-scale infrastructure projects in major growth centers. Road (53  percent) and urban development (20 percent) projects constitute the largest share of PPPs (FICCI/Ernst and Young 2012), but these are concentrated in a few states in India and are undertaken in partnership with state rather than local governments. The central government encourages the use of PPPs as means of meeting urban infrastructure gaps, from large-scale metro projects to sewerage and waste management, but a report by India’s largest chamber of commerce states, “the sector still witnesses an obstacle to private investment as there is a lack of an adequate legal framework at the state and city level and key institutions and stakeholders do not have the knowledge and capacity to carry out PPP projects” (FICCI/Ernst and Young 2012:38). Urban local governments also lack the resources to contribute funding to PPPs. According to a study by the Reserve Bank of India’s Department of

20

Comparative Perspectives

Economic Policy and Analysis, the total revenue of ULBs has been growing at a lower rate (9.6 percent during 1998–1999 to 2001–2002) than the growth of combined central and state government revenues (10.8 percent during 1998–1999 to 2001–2002), during a period of rapid urban growth and ostensible decentralization. Municipal revenue growth thus remains low despite high GDP growth in cities. India’s economic growth is driven by cities and urban regions, and they contribute an estimated 62 to 70 percent of GDP (UNDP 2009; McKinsey Global Institute 2010; World Bank 2012a). The aggregate revenue of all urban local bodies in India is very low, at around 0.75 percent of the country’s GDP. In contrast, the ratio is 5 percent for Brazil and 6 percent for South Africa (Reserve Bank of India 2007). A central government report states that “the low percentage of revenue and expenditure in ULBs is hurting the competitiveness of cities and consequently national economic growth” (Government of India Planning Commission 2011). The Reserve Bank of India analysis of municipal finances across India finds, moreover, that urban local bodies underspend on civic amenities, although most are in sound fiscal health and many have revenue surpluses. The bank explains the apparent contradiction of sound fiscal health and high levels of underspending by statutory obligations whereby ULBs are required to restrict expenditures to match available revenues and are limited in raising debt financing (Reserve Bank of India 2007). This creates an urban governance arrangement where urban development policy is directed by provincial level governments, which also capture gains in the form of financial revenues and reputation, while the ULBs are saddled with responsibilities without commensurate resources to manage urban growth (S. Chattaraj 2012). In part in reaction to the need for greater local provision of public goods to address informality, in 2005, the central government launched the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), designed to reform urban governance along with improving urban infrastructure. Funding under the $15 billion program is tied to a set of municipal reforms, of which the main thrust is to ensure that municipal governments and parastatals become financially sound and are able to access market capital for undertaking new programs and expansion of services. A second objective is to improve the means for citizen participation and accountability in local decision making through elected city government. The JNNURM also provides funds to support basic ser vices for the urban poor. Mandatory reforms under the JNNURM include “effective implementation” of decentralization initiatives as per the 74th Amendment; the repeal

Governance and Informality in China and India

21

of regulations such as the Urban Land Ceiling and Regulation Act of 1976; the reform of rent control laws balancing the interests of landlords and tenants; the rationalization of the Stamp Duty to bring it down to no more than 5 percent within seven years; and enactment of laws to institutionalize citizen participation in local decision making and governmental transparency. The program also seeks to increase the responsibility and authority of elected municipal governments, rather than provincial administrations, over urban planning and decision making. As in the case of the 74th Amendment, although some legislative changes have been made in order to access JNNURM funds, there is little evidence to show that these changes have achieved their intended effect. Despite the legislative changes made as a result of the 74th Amendment and the JNNURM, in major cities, the state government has consolidated rather than devolved powers over urban development and planning as control over urban land becomes increasingly important for political power and resources (S. Chattaraj 2012). Urban local governments still lack political power or significant autonomy over urban policy, planning, and implementation. The majority of local governments in India still relies significantly on states for a large share of infrastructure funding and ser vice provision (Jin, Ligthart, and Rider 2011). India’s system does not lead to significant competition among local governments to maximize growth as in China but rather to misalignment of incentives and confl ict between state and local levels. Overall, India’s urban governance, land-use control, and infrastructure development system have been unable to meet the rise in demand for land for housing, commercial uses, and transportation to support urbanization and economic growth.

Urbanization and Local Public Goods: Challenges Ahead China and India have experienced two very different paths of urbanization over the last few decades, reflecting their respective institutional structures and histories. Urbanization has been much slower and more informal in India than in China, but both countries face significant challenges going forward. China went from being 26 percent to 50 percent urban between 1990 and 2010 without the development of significant informal settlements and jobs while increasing the provision of urban ser vices. China’s local control

22

Comparative Perspectives

has provided incentives for infrastructure provision and land development, enabling cities to grow and accommodate a large population of rural migrants. The funding of public goods at the local level through the proceeds from land development has delivered growth but represents challenges going forward, requiring the need to develop stable sources of revenue that are not dependent on urban development. In addition, the role played by land leases in the financing of urbanization by local governments in China has resulted in major fiscal disparities: Su and Zhao (2007) fi nd that in 2007 Shanghai, the wealthiest province, had a fi scal capacity of RMB 5,180 per capita; Guizhou, the poorest, had a capacity of only RMB 322, a ratio of fiscal capacity between both provinces of more than fi fteen to one. Given the reliance on local revenues to finance infrastructures, these disparities contribute to growing regional divergence despite massive redistribution by the central government. There are also challenges associated with the reform of the Hukou system to ensure access to public ser vices for rural migrants moving to cities. There are risks of long-term social exclusion and social unrest if the issue is not addressed (Yeh 2011; World Bank 2014). Finally, one of the major challenges resulting from the focus of local governments on growth is the degradation of the environment caused by widespread misuse of land, urban sprawl, traffic congestion, and pollution. In particular, the issues of air and water quality and food security represent major longterm challenges (World Bank 2014). The limited internalization of the environmental costs of development is a drawback to the focus on economic growth that traditionally dominated China’s approach to urbanization. In particular, this internalization is linked to the process of land auction used to incorporate rural land into urban centers that represents an important source of revenue for local governments but has also resulted in “disorderly land rent competition, and thus fragmented peri-urbanization and environmental degradation as a result of ineffective governance” (Zhu 2012: 5). India has experienced lower rates of urbanization than China, and much of this urbanization has been informal both in terms of the type of settlements developed and of jobs created. This can be attributed to some extent to the lack of implementation of the decentralization reforms that were adopted, maintaining a system in which local governments are dependent on redistribution from the central government for funding and are not focused primarily on growth. Balancing multiple goals, including preserving its democratic and multicultural system, rather than adopting a single focus on GDP growth as in China, India’s governance structure has provided an

Governance and Informality in China and India

23

insufficient level of infrastructure to accommodate rural-to-urban migrants and industrial growth. Given India’s rigid regulatory regime and weak municipal governments, informal urbanization provides a market response to accommodate rural migrants drawn to cities to improve their living conditions. At the same time, the widespread informality of housing and job markets limits the access of rural migrants to resources. One result has been the in situ periurban form of urbanization in India, but even in these locales, infrastructure and public ser vices are lacking. With the 73rd and 74th Amendments and the JNNURM, India has engaged in a number of reforms and programs to support its urbanization, but the translation of these legislative actions into effective pro-growth actions that accompany the urban development of major Indian cities has been limited, and it remains to be seen if the recent initiatives to develop PPPs to fund infrastructure development will reduce the gap in infrastructure funding estimated to be necessary to support urbanization (McKinsey 2010). The capacity of Indian cities to offer jobs in the formal sector to low-skilled rural migrants remains a barrier to economic growth and welfare improvement in India. In conclusion, while both countries are still engaged in their urbanization transition, China has exhibited a faster and more formal urbanization than India. China’s structure, in which local governments are incentivized to encourage growth, has contributed to the development of land, infrastructure, and local ser vices at the expense of environmental protection. A remaining issue is rural migrants’ access to local ser vices that result in a form of informal urbanization, even if very different from what is found in India (and Latin America) as described in the other chapters of this book. India has also put in place a number of decentralization reforms attributing large responsibilities to local government, but the reforms did not result in the emergence of a new way to encourage growth across a large number of municipalities. Instead, local governments have struggled to finance investment in infrastructure and local ser vices, and the rate of development has been insufficient for the provision of infrastructure and public ser vices, resulting in a large share of informal settlement and jobs. While in China, housing production in urban areas is accompanied by local infrastructure and public ser vices, in India, the lack of the provision of public ser vices along with housing results in widespread urban informality.

CHAPTER 2

Comparative Evidence on Urban Land-Use Regulation Bureaucracy in Developing Countries Paavo Monkkonen and Lucas Ronconi

At the end of the twentieth century, the argument that the overly strict regulation of urban land use in developing countries was a central constraint to economic growth became prominent in the international development community (De Soto 1986). Urban land-use regulations are the various rules and requirements that govern the conversion of land from one type of use to another (for example, from agricultural to residential use) and the construction of buildings and infrastructure. They include such measures as building height restrictions, minimum lot sizes, urban growth boundaries, construction quality standards, land donations, environmental impact approvals, and infrastructure requirements. In order to establish a baseline of understanding about the prevalence and importance of urban land-use regulations in different regions of the world and their correlation to basic factors such as economic development, legal systems, and natural constraints to urban growth at different geographic scales (national and city), this chapter examines measures of regulatory constraints and their correlates using data from over 600 cities in more than 150 countries, with an emphasis on Asia and Latin America. The strict regulation of urban development is thought to have multiple impacts. A core assumption of the argument that regulations limit economic development is that overly stringent regulations create informality. They impose costs too high for poor urban dwellers to afford to build or acquire a

Urban Land-Use Regulation Bureaucracy

25

home, and thus they find solutions outside of the rules.1 The resulting informal housing limits the ability of homeowners to access the capital embedded in their property and thus stymies economic growth. Additionally, landuse regulations shape various aspects of urbanization. For example, cities with more stringent regulation of land use have higher land and housing prices (Saiz 2010; Kok, Monkkonen, and Quigley 2010), reducing the benefits of urban agglomeration. Regulations are also critical determinants of urban form. Restrictions on development promote densification in some cases but lead to lower densities and more sprawling cities in others (Paulsen 2013). Despite their importance, empirical evidence for the determinants and impacts of land-use regulation is limited in developing countries. Compiling evidence on the impacts of land-use regulations is challenging because of the multifaceted nature of these regulations: the broad concept of landuse regulation covers many components. Moreover, rules only have impacts where they are binding, so levels of compliance and enforcement must be a basic consideration.2 This chapter is the first effort to use two ample international databases on the stringency of land-use regulation gathered since 2006 by the World Bank’s Doing Business Project and Enterprise Analysis Unit.3 Measured by the steps, costs, and time required to obtain permits, these two sets of surveys contain data for hundreds of cities around the world, although the geographic coverage varies for different variables. We use these data to query the bureaucracy of land-use regulation: How cumbersome are the procedures to build or register property? What are the monetary costs of regulation to participants in the real estate market?4 In addition, we match the regulatory data to publicly available geographic and other sources of data to examine some basic assumptions about the factors commonly associated with cumbersome bureaucracy: the legal system, economic development, and the availability of developable land. Many of the theoretical relationships between regulations, informality, urbanization, and economic development have been empirically examined in single-country studies, most in the United States. Yet they have had significant influence over policy in developing countries (Buckley and Kalarickal 2006). Thus, empirical evidence that tests assumptions and hypotheses about the causes and consequences of land-use regulation in the developing countries is crucial to understanding informality in those places. This chapter is a first step down a long research path. It is an early reduced-form way of

26

Comparative Perspectives

assessing what can be learned from these data and demonstrating that this type of data on regulations can be used for research purposes. The organization of the chapter is as follows. We present a literature review followed by a description of data. We then assess variation in regulatory bureaucracy around the world. We pay special attention to Brazil and India as they provide a contrast in terms of the relationship between regulation and informality. India imposes notoriously restrictive regulations on urban densities (Bertaud and Brueckner 2005; Sridhar 2010), whereas Brazilian cities are well known for their efforts to incorporate favelas into a more formal system (Maia 1995; Handzic 2010). In the chapter’s last section, we present two sets of statistical associations: one between different aspects of regulatory bureaucracy (those governing construction permits and those governing property registration) and the other between regulation and factors often associated with strict regulations.

Literature Review The work of De Soto (1986, 2000) drew international attention to the question of regulatory constraints in property markets. He argued that overly stringent regulation of property in urban areas limits people’s abilities to access the true value of their assets. Yet, unlike research on the impacts of land-use regulations in the United States, which has become quite empirically sophisticated in recent years (e.g., Glaeser and Ward 2009; Saiz 2010; Kok, Monkkonen, and Quigley 2010), empirical testing of De Soto’s arguments has been relatively limited. The research on the impacts of land-use regulations on housing markets and urbanization in developing countries is primarily composed of single-case analyses (e.g., Green, Malpezzi, and Vandell 1994; Bertaud and Malpezzi 2001; Bertaud and Brueckner 2005; Buckley and Mathema 2007) or comparisons of a handful of cities (Malpezzi and Mayo 1997; Dowall and Monkkonen 2007). Data availability is the primary constraint to empirical research on this topic in developing countries. Consideration of the efforts to measure and quantify regulation in the United States is warranted, therefore, in order to cover advances in the field. The most notable effort to measure land-use regulation was carried out by Gyourko and colleagues (2008), who developed the Wharton Residential Land Use Regulation Index (WRLURI). The WRLURI consists of ten subindexes that measure different aspects of

Urban Land-Use Regulation Bureaucracy

27

land-use regulations, such as minimum lot sizes, growth controls, openspace requirements, political resistance to development, and state-level controls on construction. A similar effort led by Quigley and colleagues at the University of California, Berkeley (Quigley, Raphael, and Rosenthal 2008, 2009; Kok, Monkkonen, and Quigley 2010) combined elements of the WRLURI with a framework developed during previous land-use regulation data collection efforts in California (Glickfeld and Levine 1992). Some efforts have been made to measure, compare, and analyze the impacts of regulations in an international context. In his global analysis of housing policy, Angel (2000) used data from the Housing Indicators Program (UNCHS/World Bank 1992), including measures of three aspects of land-use regulations: time to obtain a construction permit, minimum lot size, and minimum floor area. Although the effort was important, indicators were measured at the country level for the capital city. This approach is problematic because the stringency of land-use regulation tends to vary widely across cities within a country, given that regulations are influenced by city characteristics such as size and land availability. The importance of the two geographic levels of measurement was not fully considered, and national indicators could be heavily affected, for example, by a capital city being land constrained. Smaller-scale efforts have resulted in collections of detailed data for a number of cities in developing countries but generally also look at only one aspect of regulation (Sridhar 2010; Goytia, De Mendoza, and Pasquini 2010; Monkkonen and Ronconi 2013). This chapter focuses on the variation in regulations and their determinants in more than 600 cities in 150 countries. In Indonesia, for example, in spite of relatively strict regulations on the books, the government does not exert great influence over property registration for most urban land, leaving many aspects of land management to the informal sector (Struyk, Hoff man, and Katsura 1990). Monkkonen (2013) argues that this allows Indonesian housing markets to be relatively affordable despite apparently strict regulation. This is not to imply, however, that housing affordability will necessarily result from lax regulatory enforcement and a large informal sector.

International Data on Land-Use Regulation Bureaucracy Since 2006, the World Bank has collected two notable sources of survey data on regulations:5 the Doing Business indicators and the Enterprise Surveys.

28

Comparative Perspectives

Table 2.1. Coverage of Regulatory and Other Selected Data Number of Countries with Data

Number of Cities with Data

Variable

Construction permits (doing business) Registering property (doing business) Construction permits Enforcement: taxes Enforcement: fire and safety regulations Bribery in construction Land a constraint to business Zoning a constraint to business Land availability Population

Latin America

Asia

Other

33

47

103

33

47

29 31 8

Latin America

Asia

Other

99

153

191

103

99

153

191

28 31 15

68 74 36

73 75 8

140 165 68

170 196 37

29 31

24 34

62 79

73 75

147 166

175 196

15

8

40

52

29

122

33 32

49 49

111 108

121 120

241 236

286 256

The former are collected in a collaborative manner from public officials and the private sector, whereas the latter are collected through surveys of registered firms. Many of the variables from these surveys are available for hundreds of cities around the world. Table 2.1 shows the number of countries and cities for which different variables are available. We match these survey data to other variables at the country and city level (such as the type of legal system and the size of the population), which we obtained from sources such as the United Nations and the World Development Indicators. The Doing Business Project gathers data through group interviews. The groups review the procedures necessary to get a construction permit or transfer property, and the time and cost of each step. These indicators—the steps, time, and costs—are not de jure indicators of regulations, but they can be thought of as measures of formal regulation as they do not consider either the necessity of extralegal payments or the extent of enforcement, which are important components of the regulatory framework. The project presents data on two topics relevant to land use: one on the difficulty of obtaining construction permits and another on the difficulty of transferring property

Urban Land-Use Regulation Bureaucracy

29

between two parties. Participants in the group interviews on these topics include public officials, property developers, property lawyers, notaries, and other relevant stakeholders. In recognition of the importance played by specific characteristics of a building in the permitting process, the Doing Business focus groups ask participants in all countries to consider the permitting of a warehouse of a specific size and quality. Because in many cases the characteristics of the entity requesting a permit can also affect results, the surveyors posit a hypothetical company of a particular size and value, which is also consistent across countries. This hypothetical project approach is one way of alleviating potential biases in the data; however, the disadvantage is that it does not reflect the reality of every context in terms of a standard project. If the hypothetical project—a large warehouse—is not a type of building that is built frequently, the interviewees would not be able to provide an accurate account of pertinent regulations. Figure 2.1 shows the location of the 683 cities for which some measure of land-use regulation is available, either from the Doing Business focus groups or the Enterprise Surveys. This group of 683 cities does not represent a random sample. Rather, both sets of surveys first gather data in the biggest city in a country and then gather data from other cities. They do this in different manners. The Doing Business focus groups have been conducted in roughly a dozen countries that were interested in participating, including Bangladesh, Brazil (property registration only), China, Colombia, India, Indonesia, Kenya, Mexico, Nigeria, Pakistan, the Philippines, and Russia. Surveys cover 20 cities, on average, in a given country. The Enterprise Surveys, on the other hand, are often carried out in a relatively small number of cities in a country, though the actual number depends on the question. For example, 117 countries have data on bribery in construction permitting, though 46 of these have data from only one city. Countries with data from more than one city have, on average, data from four cities. The Enterprise Surveys are of business owners and top managers of registered firms, and have been carried out in 370 cities located in 138 countries.6 They include several questions that are particularly useful in measuring regulatory bureaucracy. In particular, business owners and top managers report whether they have requested a construction permit during the last two years and how many days they waited to receive it. They also provide their opinions regarding the stringency of zoning regulations and the obstacle that access to land imposes on business expansion. These variables can take five

Figure 2.1. Map of 683 cities worldwide that have some measure of land-use regulation.

Urban Land-Use Regulation Bureaucracy

31

values: 0 if access to land is no obstacle, 1 if it is a minor obstacle, 2 if moderate, 3 if severe, and 4 if it is very severe. Finally, they report whether a gift or informal payment was asked for or expected to obtain a construction permit and whether their firm was inspected by tax officials during the last year. In a similar vein, we have created an index of regulatory bureaucracy— the bureaucracy index—by summing standardized values of the time in days and number of procedures needed to obtain a construction permit and register property. This index is composed of three of the ten subindices used in work on measuring land-use regulation in the United States by Gyourko, Saiz, and Summers (2008) or Quigley, Raphael, and Rosenthal (2008). Although this is a less comprehensive index as a result, the research on creating regulatory indices from the United States reports strong correlations between the subindices. Regulatory bureaucracy tends to be associated with other measures of regulation like minimum density zoning, growth control ordinances, or strict environmental legislation on new building (Quigley, Raphael, and Rosenthal 2008). It is worth noting that Quigley and colleagues surveyed developers as well as public officials, and report positive correlations between these two perceptions of regulatory constraint (Calfee et al. 2007).

Variation Across Regions, Countries, and Cities This section describes the variation of regulatory bureaucracy across regions, countries, and cities. Table 2.2 summarizes the various measures of regulatory bureaucracy for land use from both the Doing Business and Enterprise Survey data sets. It also includes the standard measure of the general regulatory environment, “starting a business,” that documents the steps, time, and cost to register a new company. The table compares cities in Latin American and Asian countries as well as those in other regions. The table clearly shows that overall, getting a construction permit requires many more steps and much more time and money than registering property: on average, obtaining a construction permit requires sixteen procedures and about five months, while registering property only takes about seven steps and two months. In general, Asian countries have more cumbersome land-use regulations than Latin American countries. The Doing Business data show that obtaining construction permits in Asian countries requires more procedures, which are much more costly—almost three times more—than in Latin American countries. Yet costs in both Latin America and Asia are lower than in other

Table 2.2. Summary of Land-Use Regulation Procedures in Latin America, Asia, and Other Regions Latin America

Asia

Other Regions

Cities

Mean

SD

Cities

Mean

SD

Cities

Mean

SD

Construction permits Steps Days Cost (%)

87 87 87

13.55 145.03 138.98

3.92 142.63 134.19

118 118 118

19.29 146.1 486.46

8.18 84.19 777.25

189 189 189

16.74 180.68 672.51

6.51 113.29 1549.8

Registering property Steps Days Cost (%)

99 99 99

8.52 50.88 4.21

3.05 52.83 2.72

153 153 153

6.78 55.46 6.69

2.06 63.36 4.06

191 191 191

7.05 70.08 7.66

3.24 65.81 6.96

33.79 0.09 0.17 0.19

140 147 166 69

42.26 0.45 0.66 0.52

34.01 0.32 0.26 0.32

170 175 195 36

62.04 0.25 0.74 0.81

62.19 0.26 0.21 0.32

3.11 122.56 42.14

48 48 48

7.98 31.31 21.13

3.43 30.8 27.54

103 103 103

7.56 30.77 58.14

3.45 35.46 106.32

Enterprise surveys construction permits Days 73 68.41 Bribes 73 0.11 Enforcement 1 75 0.54 Enforcement 2 8 0.18 Starting a business Steps 32 9.44 Days 32 60.91 Cost 32 34.41

SD = standard deviation. Notes: The cost of construction permits is a percentage of the country’s gross national income, and the cost of registering property is a percentage of the estimated value of the property. Enforcement 1 refers to taxes and Enforcement 2 to fire and safety. Source: Doing Business, n.d.; Enterprise Survey, n.d.

Urban Land-Use Regulation Bureaucracy

33

regions of the world, and the time it takes to obtain construction permits is also shorter. Latin American and Asian countries have similarly restrictive property registration systems, both of which are slightly less time consuming and expensive than those in other regions. The Enterprise Surveys also ask firms about delays in obtaining construction permits. Firms in Latin America report longer waiting times to obtain a construction permit compared with firms in Asia, though both are lower than the Doing Business measures reported. This difference between the two surveys could be due to a number of factors, starting with the fact that the surveys cover different cities. Additionally, the Enterprise Survey includes any type of construction permit, whereas Doing Business posits a warehouse of specific size and quality. The Enterprise Survey provides measures of the actual time to obtain a permit, which can be shorter than the stipulated time in the Doing Business data. The difference between the two surveys is likely due to the fact that the Doing Business surveyors ask respondents not to take into consideration factors such as paying a bribe to speed up the permitting process when they estimate delays. Finally, business owners and high-level managers in Latin America are much less likely than their counterparts in Asia to report having had to pay a bribe to obtain a construction permit—only 11 percent of the time in Latin America compared with 45 percent in Asia. Additionally, firms in Asia are more likely to be inspected by tax officials and much more likely to be inspected by fire safety officials. This strong difference in what is essentially informal activity is somewhat surprising in the real estate sector given the general perspective of rampant informality in Latin America and relatively strong developmental states in much of Asia. Of course, reliable data on the prevalence of informality are not available, but De Soto’s (2000) numbers on informal housing put Asia and Latin America at relatively similar shares: 85 percent in Asia and 82 percent in Latin America. Interestingly, the difference between Asia and Latin America is reversed when it comes to general business regulations. Asian countries have faster and cheaper procedures for starting a business on average, almost twice as fast and one-third as costly.

Variation Within Regions

Regulatory constraints to construction permitting and property registration vary more within regions than across them. In order to appreciate the

34

Comparative Perspectives

variation, we present kernel density functions showing the distribution of the variables separated by region: Asia, Latin America, and the rest of the world. Figure  2.2 shows the distribution of six measures of land-use regulation bureaucracy: the cost and days to obtain a construction permit and to register property, the prevalence of bribery in obtaining construction permits, and the level of enforcement of fire and safety regulations. There are cities in both Asia and Latin America with high and low levels of regulations in this sample, though Asian cities generally have higher averages and more variation. The variation in the costs and delays in property registration is smaller than that of costs and delays in construction permitting in most regions. More firms report cases of bribery and stronger enforcement in the property sector in Asia than in Latin America, but at the same time, there is greater variation across cities. Differences between Asia and Latin America might be explained in part by the fact that Asian cities in this sample have a larger population on average, though the distribution is less normally shaped: some very small cities are included as are some very large ones. In terms of land availability, Latin American cities in the sample stand out as having less land available for development. The construction of the variable describing land availability is described below. The large number of Asian cities built in areas without natural constraints to expansion reflects the geography of India and Pakistan, where cities have an average of about 85 percent of land available for development rather than countries like Indonesia or the Philippines, where cities have an average of 65 and 49 percent, respectively, of nearby land available for development.

Variation Within Countries

The great majority of variation in regulatory bureaucracy in the sample of cities is explained by differences between countries. For example, 80 percent of the variation in costs of construction permitting at the city level is explained by country dummy variables in a regression using data from Latin America, and 87 percent of the variation in the costs of permitting across cities is explained by country in Asia. Nonetheless, regulatory bureaucracy varies substantially within countries as well. For example, in the Philippines, construction permits can be obtained within two months in the least regulated city but can take more than five months to acquire in the most

Figure 2.2. Density distribution of selected measures of land-use regulation bureaucracy in Latin America, Asia, and other regions.

36

Comparative Perspectives

regulated city. Similarly, in Mexico, the process takes between one and six months, depending on the city. Table 2.3 summarizes statistics on land-use regulation bureaucracy and costs in Indian and Brazilian cities. Relative to the economy and property values, obtaining construction permits and registering property is much more costly in Indian cities than in Brazilian cities, although getting a construction permit takes longer in Brazil. Bribery is more prevalent in India, which might result in the higher de jure costs reported in the Doing Business surveys. Cities in the two countries also exhibit different levels of regulatory constraint relative to their regions. On average, cities in the two countries require a similar number of steps and exhibit similar time delays in order to get permits and to register property. However, the bureaucracies of Indian cities impose a greater cost to build or register property than bureaucracies of other Asian cities, and Brazilian cities have relatively lower regulatory costs than in Latin America overall. India does have a slightly more onerous bureaucracy in some ways, such as higher levels of bribery. This fits the previously mentioned reputation India holds as a place that pushes many into informality due to strict regulations such as restrictive Floor-Area Ratios and resulting bribery. It also has a more regulated business environment, as measured by the difficulty in starting a business, than other Asian countries do. Brazilian cities, on the other hand, have a similarly stringent land-use bureaucracy as other Latin American cities, but it is cheaper on average to go through these processes in Brazil. In terms of bribery and enforcement of fire and safety regulations, Brazil is quite similar to the Latin American average.

Where Is Land-Use Regulatory Bureaucracy Especially Onerous? In this section, we empirically examine the relationship between country- and city-level factors commonly assumed to be associated with onerous regulatory bureaucracy. First, however, we examine the correlations between the different measures of regulatory bureaucracy and relevant measures of enforcement and bribery. Table 2.4 reports the Spearman correlation coefficients for these variables. As expected, the bureaucracy index (defi ned earlier as the sum of steps and time necessary to obtain permits) correlates strongly with the cost of obtaining a construction permit. Surprisingly, however, the association between the same index and the cost of registering property is not significant.

Table 2.3. Summary of Land-Use Regulation Procedures in Brazil and India India Variable

Brazil

Cities

Mean

SD

Min

Max

Cities

Mean

SD

Min

Max

Construction permits Steps Days Cost

17 17 17

20.5 162.2 906.4

6.4 46.5 874.4

15 80 204.4

37 258 2717.7

1 1 1

17 445.5 50.8

NA NA NA

17 445.5 50.8

17 445.5 50.8

Registering property Steps Days Cost

19 19 19

5.1 62.9 11

0.9 35.4 4.3

4 26 5.5

7.5 132 25.4

13 13 13

13.9 59.3 3.4

0.2 19.4 1

13.3 27 2.1

14 88 5.2

Enterprise surveys construction permits Days 42 31.6 Bribes 43 0.6 Enforcement 1 50 0.8 Enforcement 2 50 0.4

19.3 0.3 0.3 0.3

1 0 0 0

102.5 1 1 1

15 15 15 0

51 0.1 0.6 NA

18.9 0.1 0.1 NA

27.8 0 0.4 NA

95 0.3 0.7 NA

Starting a business Steps Days Cost

NA NA NA

13 30 66.1

13 30 66.1

1 1 1

14 119 6.9

NA NA NA

14 119 6.9

14 119 6.9

1 1 1

13 30 66.1

SD = standard deviation. Notes: The cost of obtaining a construction permit is expressed as a percentage of the country’s gross national income (GNI), whereas the cost of registering property is a percent of the estimated value of the hypothetical property. Source: Doing Business, World Bank (http://www.doingbusiness.org); Enterprise Surveys, World Bank (http://www.enterprisesurveys.org).

38

Comparative Perspectives

Table 2.4. Correlations Between Regulations and Enforcement Cost Permitting

Cost Property

Zoning Obstacle

Land Obstacle

0.43*** [391]

—

—

—

—

Cost property

0.04 [391]

0.29*** [391]

—

—

—

Zoning obstacle

0.16 [68]

−0.08 [68]

−0.25 [78]

—

—

Land obstacle

0.17** [181]

0.21*** [183]

0.17** [198]

0.38*** [203]

—

Enforcement 1

0.11 [180]

0.26*** [182]

0.18*** [197]

−0.14** [203]

0.02 [436]

Enforcement 2

0.05 [72]

−0.38*** [72]

−0.26** [76]

0.17 [32]

0.14 [113]

Bribery Construction

0.07 [156]

0.34*** [158]

0.22 [172]

0.14** [197]

0.13*** [395]

Variable Cost permitting

Bureaucracy

Notes: *, **, and *** indicate significance at the 0.10, 0.05, and 0.01 levels respectively. The number of observations is reported in brackets. Enforcement 1 refers to the enforcement of fire and safety rules. Enforcement 2 refers to the enforcement of tax requirements.

Construction permitting costs are strongly associated with other measures of regulatory bureaucracy, such as enforcement of fire and safety rules and bribery. The association with bribery fits the predictions of the mostly theoretical argument that it is stringent regulations themselves that push individuals into an informal sector. It also supports an idea of public officials using onerous regulations to engage in rent-seeking behavior and extract money from those seeking to build housing or real estate. Surprisingly, none of the measures of regulation from the Doing Business survey are associated with firms citing zoning as an obstacle to business expansion. This reflects the multifaceted nature of regulation and how rules, such as the ability to change land’s permitted use or minimum lot sizes, can be relatively less strict in places where obtaining a permit is a cumbersome process. In contrast, firms are significantly more likely to report that access to land is an obstacle to expanding their business in cities that have higher levels of regulatory bureaucracy.

Urban Land-Use Regulation Bureaucracy

39

In order to compare regulation properly across countries, we adopt a multilevel framework to consider the importance of factors that vary at the country and city levels. At the country level, we assess the relationship between regulation and economic development and the origins of the country’s legal system, while at the city level, we consider population size, natural constraints to urban expansion, and population density. We focus on the three measures of regulation from the Doing Business surveys: the bureaucracy index, the cost of obtaining a construction permit (log), and the cost of registering property (log), as well as responses from the Enterprise Surveys about the perceived obstacles imposed by zoning regulations, enforcement of fire and safety rules, and bribery in construction permitting. Country-level data on gross domestic product (GDP) are readily available from the World Bank Development Indicators. The origin of a country’s legal system is considered a determinant of regulatory stringency in other work, most notably that by La Porta and colleagues (1997). They make the argument that a country’s legal system, which in many cases was imposed on that country during the colonial era, determines the quality of investor protections and, therefore, significantly affects levels of investment. By the same logic, legal systems determine the stringency of land-use regulation to a large extent. We compare associations between legal systems based on Germanic, civil (French), common (English), and socialist traditions. At the city level, we consider the three factors noted above: population size, population density, and the availability of developable land. The population size for the greater urban area of each city is estimated from the LandScan Global (2011) data, as is the population density of the city. In order to measure the availability of developable land for urban expansion, we follow the work of Saiz (2010) in the measurement of natural constraints to growth. We make an indicator by drawing a circle with a forty-kilometer radius around the city center and then calculating the percentage of land within this circle on which urban development is physically possible by removing the land that is either underwater, steeply sloped, or in a different country. The strongest association we fi nd is the negative correlation between a country’s level of economic development and the regulatory bureaucracy of land use. As shown in Figure 2.3, obtaining a construction permit or registering property in poorer countries is more expensive (relative to income or the value of the building) and more time consuming than in wealthier countries. There are several potential explanations for this: poorer countries may have lower-quality political institutions; lower education levels in

40

Comparative Perspectives

Figure 2.3. Scatter plots of the 2011 gross domestic product per capita and land-use regulation bureaucracy.

poorer countries might lead to less efficient public officials; governments in poorer countries might be more likely to use regulations to extract bribes; poorer countries may have lower tax rates or smaller tax collection capacities and hence rely on other means (such as fees to obtain permits or register properties) to obtain revenues; or fi nally, regulations themselves may be retarding economic growth. As part of efforts to understand economic growth, there is a vibrant scholarly debate over the “chicken or egg” as to whether economic growth precedes institutional development or vice versa (Ho and Spoor 2006). Within this context, overly stringent land-use regulations are generally perceived as an example of the inefficient institutions limiting economic growth. Nonetheless, the extent to which land market efficiency depends on the enforcement of clearly defined property rights through a state-run administrative

Urban Land-Use Regulation Bureaucracy

41

structure in all contexts is not clear. Miceli and colleagues (2000), for example, show that a high cost of recording or registering land titling can make informality a preferable choice for many households. In the four cases presented in Figure 2.3, the strong correlation between a burdensome land-use regulation system and economic development persists even when controlling for a measured general regulatory environment, that is, measured with an index of the steps, costs, and time needed to start a business. In regressions with the cost and time of obtaining construction permits and registering property as dependent variables and controls for the cost and time of registering a business, GDP per capita is a significant predictor of all land-use regulation measures. Adding this general regulation as a control variable changes coefficients on GDP per capita by 20 percent at most. Table 2.5 shows the results of a set of Ordinary Least-Squares regression models used to evaluate the importance of a country’s legal system in its level of regulatory bureaucracy related to land use. The table is orga nized in a

Table 2.5. Regression Coefficients for Legal System Dummy Variables Dependent Variable

French Law

German Law

Socialist

Other

Adjusted R2

N

Bureaucracy

0.783* [0.429]

0.493 [0.625]

2.171*** [0.805]

0.15 [0.710]

0.03

180

Cost permitting

0.829*** [0.301]

−0.101 [0.440]

1.058* [0.568]

−0.034 [0.477]

0.04

183

Cost property

0.213 [0.181]

−0.695*** [0.264]

−1.419*** [0.328]

−0.769** [0.300]

0.17

182

Zoning obstacle

0.600*** [0.139]

0.590*** [0.170]

0.978*** [0.174]

— —

0.33

60

Enforce fire and safety

−0.206 [0.126]

0.128 [0.130]

0.192 [0.141]

0.057 [0.241]

0.18

59

Bribery construction

0.012 [0.045]

−0.105 [0.075]

0.195*** [0.075]

−0.002 [0.126]

0.06

115

General business index

1.390*** [0.373]

−0.673 [0.560]

−0.645 [0.669]

−0.893 [0.597]

0.14

178

Notes: *, **, and *** indicate significance at the 0.10, 0.05, and 0.01 levels respectively. Standard errors are in brackets.

42

Comparative Perspectives

slightly atypical manner in order to accommodate the large number of models; model results are presented in rows rather than columns. Data are limited to the biggest city in each country due to the unbalanced nature of the sample. Some countries have data for multiple cities while most have data for only one; thus were we to include all cities, it would give disproportionate weight to the countries with data on more than one city. The models include dummy variables for four different legal systems: French or civil law, Germanic, socialist, and other, with English or common law systems omitted as the base category. Identical models were run with a control for GDP per capita, which does not change the significance or sign of variables. Countries’ legal systems are related to the level of regulatory bureaucracy in important ways. Legal systems are arguably less malleable than other variables and are thus exogenous to regulatory bureaucracy in a way that others are not. Additional regression models are also run using an index created with data on the general business environment (starting a business) as a control variable. This control rests on the established correlation between legal systems and economic performance (La Porta et al. 1997). Results for legal systems are very similar to those reported in Table 2.5. For almost all measures, results show that common law systems have less cumbersome regulatory bureaucracy than other legal systems. The one exception is property registration.7 Regulations governing property transfers are more closely connected to the country’s legal system overall than those governing construction permits, as demonstrated by the larger R-squared in the model of property registration (0.17 as compared with 0.04) and the fact that most coefficients for legal system dummy variables are significant in the model. This is not surprising given that construction permitting rules are more likely to vary by city and level of economic development, whereas rules on land transfers are closely tied to historical precedent and tradition. The aspect of regulation most closely related to legal systems seems to be zoning: a third of the variation in firms’ ratings of zoning as an obstacle to doing business is explained by legal differences between countries. On average, civil law systems have a more onerous bureaucracy, more expensive construction permitting, and more constraining zoning regulations than common law systems do. Yet it is cities in countries with socialist legal systems that experience the highest levels of regulatory bureaucracy. The one exception is the cost of registering property transfers, which is much lower on average than in common law systems. The extent to which fire and safety

Urban Land-Use Regulation Bureaucracy

43

Table 2.6. Partial Correlations Between Regulations and City Characteristics, Controlling for National GDP per Capita Variable Bureaucracy Cost permitting Cost property Zoning obstacle Enforce fire and safety Bribery construction

Population

Developable Land

Density

0.23** [191] 0.44*** [191] 0.11 [195] −0.15* [162] 0.12 [53] 0.22*** [287]

−0.01 [214] −0.02 [214] −0.20*** [214] 0.02 [167] 0.20 [52] 0.09* [299]

0.33*** [192] 0.42*** [192] 0.05 [197] −0.09 [162] 0.09 [53] 0.01 [288]

GDP = gross domestic product. Notes: *, **, and *** indicate significance at the 0.10, 0.05, and 0.01 levels, respectively. Number of observations in brackets.

regulations are enforced is not significantly associated with a country’s legal system. Results are not reported here, but our analysis shows that the level of enforcement of tax laws is also not related to legal systems. Table 2.6 shows partial correlations of the six measures of regulatory bureaucracy and three factors commonly considered to be associated with stringent land-use regulations. The partial correlations control for the logged value of the country’s per-capita GDP because this was found to be a strong correlate with regulation previously and is associated with these measures of urbanization. In order to use this control variable, we must limit the sample to those countries for which we have regulatory data on more than one city. This reduces the sample size but provides a more robust estimate of the relationship between regulation and city characteristics. The correlations exhibit two salient patterns. The first is the unexpected lack of association between the variable measuring natural constraints to urban growth—developable land—and most of the regulatory variables. In work on the topic of land-use regulations in the United States, this was an important determinant of levels of regulation (Saiz 2010). The one exception to this pattern is the cost of property registration, which is strongly associated with land availability. Cities with less land for expansion regulate property transactions more heavily. The second salient pattern is related. There is a clear contrast between factors associated with construction permits and regulatory bureaucracy on the one hand and property registration on the other. The population and population density of a city are very

44

Comparative Perspectives

strongly related to the cost of construction permits and the bureaucracy index, but not at all to the cost of property registration.

Conclusion In this chapter, we describe the bureaucracy of land-use regulation in more than six hundred cities around the world. We draw special attention to Asia (India) and Latin America (Brazil). In addition to assessing correlations between different measures of land-use regulation bureaucracy, we examine connections between this bureaucracy and other factors associated with regulatory stringency. We find that in most cases, following the law when developing land for urban use is more cumbersome and expensive in Asia than in Latin America. India and Brazil are similar to their regions in that India is more cumbersome and expensive than Brazil, although India is more restrictive than the Asia average and Brazil less than the Latin America average. Th is tendency is also true in terms of enforcement and bribery. The first notable finding is the strong relationship between economic development and the regulatory bureaucracy of land use, which are strongly negatively correlated at the country level even after conditioning on the general regulatory environment. This is likely a recursive, two-way relationship—the “chicken or egg” of institutions and development referred to previously. Lower levels of economic development make permitting relatively time consuming and costly, and cumbersome regulations also reduce the potential for economic growth. Although the debate over property rights institutions and economic development more generally is well established (Ho 2013), the parallel relationship between regulations and informality is less well understood. Fortunately, the endogeneity of the latter relationship is perhaps less complicated. Whereas a widespread prevalence of informality in urban development might lead governments to enact more stringent ordinances to some extent, strict regulation is much more likely to contribute to a prevalence of informality. That said, this chapter did not attempt to measure informality or correlate it to regulations other than through measures of bribery. Nonetheless, it should assist in framing future efforts. Th is chapter also presents an analysis of other factors associated with strict regulatory bureaucracy. The proper framework for analyzing correlations with regulatory strictness is multilevel—country and city characteristics both matter—and as such we examine these two levels separately. We find

Urban Land-Use Regulation Bureaucracy

45

that legal systems affect regulation; common law countries tend to regulate urban development less heavily than those with other legal systems, except when it comes to the cost of registering property. Moreover, property transfers and zoning are more closely connected to legal systems than construction permitting. At the city level, larger and denser cities regulate construction permitting more strictly, as expected based on theory and existing empirical work. There is a surprising lack of association between natural constraints to urban development such as water and mountains and constraints imposed by regulations. It is generally expected that cities where land is scarce due to geographic constraints will be more likely to impose regulatory constraints, yet for the most part this is not the case. The one exception is the cost of property registration, which has the expected, moderate negative correlation with the amount of developable land nearby. We also find that firms report higher levels of bribery in cities with more onerous regulation. This finding is relevant to the hypothesized relationship between regulatory stringency and the informal sector. It can be interpreted alternately as public officials taking advantage of regulations to engage in rent-seeking behavior or the same public officials being flexible, allowing real estate development to occur outside of rules that might be inappropriate. More work on this aspect of informality is warranted. A final important finding in this analysis is that construction regulation is markedly different from the regulation of land ownership in terms of correlates and severity in a given place. Building regulations seem to be more endogenous given their association with city characteristics and the fact that there are large amounts of variation in procedures within countries. We can imagine that local officials respond to urban growth pressures by changing levels of regulations. Land registration, on the other hand, exhibits less local control, as evidenced by the limited variation in procedures and costs within countries. They are more likely to be governed by national laws and agencies, and are thus less endogenous with local conditions. The international comparison and analysis of land-use regulations is important for the policy advice researchers might give on the topic. In the past, researchers have tended to generalize results from one country to another—usually from the United States to developing countries—with too little consideration of differences in context. We have shown here that there are consistent patterns of factors associated with higher levels of regulation internationally: legal systems or availability of developable land, for

46

Comparative Perspectives

example. However, these should be taken into consideration when discussing regulatory reform. One implication is that not all cities should be expected to reduce regulatory constraints to the same level. We hope this chapter provides a framework within which further research, more tailored to policy, can fit.

CHAPTER 3

Urban Land Titling: Lessons from a Natural Experiment Sebastian Galiani and Ernesto Schargrodsky

The literature on economic growth has traditionally focused on capital accumulation and technological change in an institution-free world with perfect property rights. However, the new institutional approach to development economies (see, among others, North 1990), building on the pathbreaking work of Ronald Coase (1960), has recognized that creating, specifying, and enforcing property rights is costly, and, hence, they will never be perfect (see, in particular, Barzel 1997). Therefore, the institutional approach to development now recognizes that in a world with positive transaction costs, which can be understood as representing the resources used to establish and maintain property rights, the provision of property rights affects the allocation of resources. The fragility of property rights is considered a crucial obstacle for economic development. The main argument is that individuals underinvest if others can seize the fruits of their investments. In today’s developing world, a pervasive manifestation of feeble property rights are the millions of people living in urban dwellings without possessing formal titles to the plots of land they occupy. Land-titling programs have been advocated in policy circles as a powerful instrument for poverty reduction. De Soto (2000) emphasized that the lack of property rights impedes the transformation of the wealth owned by the poor into capital. Proper titling could allow the poor to collateralize the land. In turn, this credit could be invested as capital in productive projects, promptly increasing labor productivity and income. Inspired by these ideas,

48

Comparative Perspectives

and fostered by international development agencies and private institutions, land-titling programs have been launched throughout developing and transition economies as part of poverty alleviation efforts. The important questions are then the following: Are land-titling programs a powerful tool to reduce poverty? In other words, what are the causal effects of urban land titling? Answering these questions is not easy. To identify what would happen to a family if it received the title to the plot of land it inhabits instead of staying on that piece of land without the legal title is complicated methodologically. Identifying the causal effects of land property rights necessitates the assessment of the missed counterfactual, that is, what would have happened in the absence of those rights? Thus, any attempt to answer this question has to compare the outcomes associated with titled and untitled land. However, the allocation of property rights across units is usually not random but is based on wealth, family characteristics, previous investment levels, or other mechanisms built on differences between the groups that acquire those rights and the groups that do not. Exogenous variability in the allocation of property rights is necessary to solve this selection problem. In a series of papers, Galiani and Schargrodsky (2004), Di Tella, Galiani, and Schargrodsky (2007), and Galiani and Schargrodsky (2010) addressed this selection problem by exploiting a natural experiment in the allocation of urban land titles to a very deprived population group in Argentina. In this essay, we rely on the findings obtained from exploiting this natural experiment to shed light on the question of what the effects of land titling are among poor households, which tend to be untitled in developing countries (see also Galiani and Schargrodsky 2014).1

A Natural Experiment to Evaluate the Effect of Property Rights The natural experiment exploited in these papers actually started in 1981, when about 1,800 landless families organized by a Catholic chaplain occupied a wasteland in the San Francisco Solano area, on the outskirts of Buenos Aires. At the time of the occupation, the squatters thought the land belonged to the state, but they later found out that it was private property. The occupied area turned out to be made up of thirteen tracts of land belonging to different private owners, which were partitioned by the squatters into small, urban-shaped parcels for each household. The squatters resisted several

Urban Land Titling

49

eviction attempts during the military government. After Argentina’s return to democracy in 1984, the Congress of the Province of Buenos Aires passed a law expropriating the land from the former owners, in exchange for monetary compensation to be paid by the government, and allocating it to the squatters. The resulting titling process, however, was incomplete and asynchronous. The government made a compensation offer to each original owner calculated in proportion to the official tax valuation of each tract of land, which had been set by the fiscal authority to calculate property taxes before the land occupation. The government offers were very similar (in per-square-meter terms) for the thirteen land tracts. Each of the original owners had to decide whether to accept the expropriation compensation proposed by the government or to start a legal dispute with the aim of obtaining higher compensation. In 1986, eight former owners accepted the compensation offered by the government. By 1989, the state transferred to the squatters the formal land titles that secured the property rights to the parcels (early treated group). However, five former owners did not accept the government’s compensation offer and disputed the expropriation payment in the slow Argentine courts. Thus, the process of expropriation was incomplete. One of these five trials ended in 1998, and this tract of land was transferred to the squatters (late treated group). The other four lawsuits were still pending at the time that the studies were conducted. A result of this episode is that there are two groups of squatters living in very close proximity to each other, one of which has formal property rights (because its members live on parcels of land that used to belong to the former owners who accepted the expropriation or whose lawsuit ended) and the other of which remains untitled (because its members occupied parcels of land belonging to the challenging owners). This allocation of land titles was unrelated to the squatters’ characteristics. At the time of the occupation, the squatters did not know that the land had private owners, nor that an expropriation law was going to be passed, nor which parcels of land had owners who would accept (or dispute) the compensation offer, nor which eventual lawsuits could end first. Titled and untitled households arrived at the same time and were similar at the time of their arrival. A statistical comparison of the household characteristics of these two groups before receiving the treatment (that is, before one group received titles) shows that the hypothesis of exogenous assignment of land titles during this natural experiment cannot be rejected. There are no significant

50

Comparative Perspectives

differences between the treatment and control groups in the age, gender, years of education, and other characteristics of the family member who was the household head at the time of the occupation. There are also no differences in plot characteristics. Moreover, the squatters had no participation in the legal process between the government and the former owners, and the values of the dwellings they constructed were explicitly excluded from the calculation of the expropriation compensation.2 Obtaining property rights depended on the decision of the original owners to challenge the expropriation as well as on the resolution of these legal processes. Given that these factors were exogenous to the squatters, it is possible to study the effect of the intervention “to give property rights” by comparing individuals who received and did not receive land titles but who live in very close proximity, had similar pretreatment characteristics, and have been exposed to similar life experiences (with the exception of the treatment).

Results from the Natural Experiment Do titled households have more access to credit? The evidence provided in Galiani and Schargrodsky (2010) suggests that the difference in this respect was not large. The small credit effects are not surprising, given the population under consideration. Potential lenders may feel that they would have little chance of success in legally evicting families in these socioeconomic groups in the event of default or that the market value of their parcels is too low to offset the legal costs involved. Additionally, the ownership of real estate does not appear to be a sufficient condition to qualify for formal credit, which, in Argentina, is generally accessible only to formal workers who have held their current job for a certain number of years and who earn relatively high wages. In consequence, only 4 percent of early titled households have ever received a mortgage-based loan.3 In addition, Galiani and Schargrodsky (2010) did not find differences at all in earnings. Titled and untitled households have similar total earnings. Thus, should we conclude that entitling the urban poor is not a sensible policy? Not necessarily. The possession of land titles may affect the incentives to invest in housing construction through several concurrent mechanisms, beyond credit access. The traditional view emphasizes security from seizure. Individuals underinvest if others may seize the fruits of their investments. Land titles can

Urban Land Titling

51

also encourage investment by improving the transferability of the parcels. Even if there were no risk for expropriation, investments in untitled parcels would be highly illiquid, whereas titling reduces the cost of alienation of the assets. A third mechanism is that land titles provide poor households with a valuable savings tool. Poor households, especially in unstable macroeconomic environments, lack appropriate savings instruments. Land titles allow households to substitute present consumption and leisure into long-term savings in real property. Galiani and Schargrodsky (2010) investigated empirically the impact of legal land titles on housing investment and found that entitled families, between seven and fourteen years after receiving the titles, owned much better houses than untitled families. They found large effects of land titling on the probability of having walls and a roof of good quality. The proportion of houses with good-quality walls rose by 40 percent under land titling, while the increase reached 47 percent for a good-quality roof. Their results also suggested a statistically significant increase of about 12 percent in constructed surface under the presence of land titles. Finally, they reported that a variable summarizing the overall aspect of each house using an index from 0 to 100 shows a large and significant effect of land titling on housing quality. Relative to the baseline average sample value, the estimated effect represented an overall housing improvement of 37 percent associated with titling. These results show that moving a poor household from usufructuary rights to full property rights substantially improves housing quality. This micro evidence supports the hypothesis that securing property rights significantly increases investment levels. The possession of land titles may also affect the size and structure of households. There are several potential reasons for that to happen. Insurance motives could be important. The poor lack access to well-functioning insurance markets and pension systems that could protect them during bad times and retirement. With limited access to risk diversification, to savings instruments, and to the social security system, the need for insurance has to be satisfied by other means. A traditional provider of insurance among the poor is the extended family. Another possibility is to use children as future insurance. Moreover, the lack of land titles might reduce the ability of household heads to restrict their relatives from residing in their houses. In addition, untitled households may feel in need of increasing the number of family members in order to protect their houses from occupation by other squatters (Lanjouw and Levy 2002; Field 2007).

52

Comparative Perspectives

Galiani and Schargrodsky (2010) found large differences in household size between titled and untitled families. Untitled families had an average of 6.06 members, while titled households had 0.95 members less. The difference in household size seemed to stem from two factors. First, there was a higher presence (0.68 members) of non-nuclear relatives in untitled households. Untitled households reported a much larger number of further relatives of the household head who were not her or his spouse or offspring (i.e., siblings, parents, in-laws, grandchildren, etc.) than entitled households. Second, the entitled households showed a smaller number of offspring of the household head born after the title allocation. However, this result was seen only in the early treatment group. The logic for this is that the early treatment group had the time to significantly adjust fertility as a result of the treatment. The reduction in the presence of extended family members that is associated with titling may reflect the need for extra protection of the tenure rights of untitled households, as argued by Field (2007). Galiani and Schargrodsky (2010) discussed two additional mechanisms. First, the property owned by titled households and the incremental housing investment provided an insurance tool for use during old age and bad times, whereas insurance for untitled households was provided through higher fertility and the presence of non-nuclear family members. Second, a lack of title increased intrahousehold transaction costs. In the absence of a land title, the division of property among household members became more complicated, forcing relatives to remain in the same house in order to protect their informal rights. The seminal work of Becker and Lewis (1973) advanced the presence of parental trade-offs between the quantity and the quality of children. Th is trade-off appears because limited parents’ time and resources are spread over more children. If land titling causes a reduction in fertility, it could also induce households to increase educational investments in their children. Galiani and Schargrodsky (2010) explored this hypothesis by looking at differences in educational outcomes. They showed that for the offspring of the household head in the early treated households (the group of children for which they find a reduction in the number of members), there was a large effect on school achievement. The likelihood that children in households that hold title to their properties would complete secondary school is 27 percentage points higher than it was for those in households that lacked title to their land. Consistently with the documented effects on fertility, this result was also seen only in the early treatment group.

Urban Land Titling

53

Moreover, Galiani and Schargrodsky (2004) explored the effects of land titling on child health. They showed that children in the titled parcels enjoyed better weight-for-height scores than those in the untitled parcels, although there were no significant differences in height-for-age measures. In addition, they found that teenaged girls in the titled parcels showed lower pregnancy rates than those in the untitled parcels. In the sample under study, Galiani and Schargrodsky (2004) reported that teenage pregnancy was an important problem. Among fourteen- to seventeen-year-old girls who answered a question on teenage pregnancy, 11.4 percent were or had been pregnant at least once. The authors found that the pregnancy rate was substantially higher in the untitled parcels (20.8 percent) than in the titled parcels (7.9 percent). Thus, entitling the poor seems to enhance their investment both in the house and on the human capital of the children of the entitled families, which will reduce their poverty in the future. Additionally, exploiting this natural experiment, Di Tella, Galiani, and Schargrodsky (2007) studied the formation of beliefs among squatters. They found a significant difference in the beliefs that squatters with and without legal titles declared to hold. These beliefs were obtained through survey questions designed to broadly capture beliefs that appear important to the workings of a capitalist society, namely, individualism, materialism, the role of merit, and trust. Di Tella, Galiani, and Schargrodsky (2007) reported that the set of beliefs declared by squatters with property rights were significantly different from those held by squatters without titles. The change in beliefs was consistently in the direction of what can loosely be called “market beliefs” (for example, in the sense that they are more individualist and materialist). This is interesting because of the strong similarities in the lives of squatters with and without titles. Moreover, the estimated causal effect was sufficiently large so as to make the beliefs of squatters with legal titles comparable to those held by the Buenos Aires general population. This is interesting because of the remarkable differences in the lives these two groups lead.

Conclusion Land property rights can influence the efficiency of resource allocation through a number of different channels. First, the possession of land titles

54

Comparative Perspectives

may enhance investment incentives by limiting expropriation risk and may reduce the need to divert private resources to the protection of property. Second, land titling facilitates transferability and therefore stimulates trade. Third, by improving collateralization, land titling may enhance credit transactions. Fourth, secure land rights may affect the intra household allocation of resources. Finally, land property rights may influence economic outcomes through changes in the belief system of the population. In this chapter, we have summarized the findings of a natural experiment concerning land titling in Buenos Aires in order to shed light on the effects of land titling on physical investment, household structure, human capital accumulation, access to credit, and earnings and beliefs. The study of this natural experiment shows that land property rights have a significant and positive effect on home investment. However, this positive result does not appear to be the result of improved access to credit. Furthermore, no effects of land titling on labor income were detected. Land titling also influences household structure, as it appears to reduce household size by favoring the residence of nuclear family members over non-nuclear ones and by reducing fertility. Once fertility is reduced, the evidence also suggests that there is a large positive effect on human capital accumulation. Last, we have reported that the possession of property rights encourages pro-market beliefs, which can undoubtedly have a strong impact on individuals’ economic behavior and, in turn, on the institutional system (North 2005).

PA R T II Anthropological Perspectives

This page intentionally left blank

T

he case studies in this section challenge the broad brushstrokes that are used to portray real estate transactions in informal communities. They focus on four communities in India and Brazil to show how informal real estate markets function. The chapters inject detailed portraits of individuals and organizations into descriptions of urbanization processes that encompass the often conflictual relationships between renters and landlords, informal dwellers and real estate developers, government officials and neighborhood activists. In so doing, they address the question, What do the categories “formal” and “informal” mean in a market context? Janice E. Perlman, in “The Formalization of Informal Real Estate Transactions in Rio’s Favelas,” explores the differences between real estate transactions in the formal and informal sectors, and finds that the lines between formal and informal transactions are progressively becoming blurred. In “Tenure Regularization Programs in Favelas in Brazil,” Patricia Cezario Silva and Yvonne Mautner examine regularization programs and the impacts they do and do not have on the workings of informal real estate markets. Shahana Chattaraj in “Property Markets Without Property Rights: Dharavi’s Informal Real Estate Market” provides a detailed description of rental and sale real estate transactions in both the residential and commercial sector in Dharavi’s slum in Mumbai and the motives and practices that make these markets work. In “Periurban Land Markets in the Bangalore Region,” Sai Balakrishnan explores the transition from rural to urban land use in periurban areas in Bidadi, a village in Bangalore’s periphery. She illuminates how the interaction between existing informal land-use regulations conflicts with the emerging market-oriented mechanisms. In sum, these case studies reveal that informal real estate markets are anything but casual. They are purposeful in developing rational, orderly, albeit extralegal, processes to manage transactions.

CHAPTER 4

The Formalization of Informal Real Estate Transactions in Rio’s Favelas Janice E. Perlman

The favelas of Rio de Janeiro—now famous in film, song, dance, style, sports, and tourism—have thriving real estate markets, yet little is known about how these markets function. The defining characteristic of favelas, like squatter settlements or shantytowns everywhere, is that they are built on “invaded land,” generally by newly arrived migrants from rural areas who have no other place to live. Over time they grow from a few shacks to large, dense communities. The self-built homes are bought and sold despite the lack of land title. How does that work? How do buyers and sellers find each other, determine sales prices, write up contracts, and secure their agreements in the absence of legal title to the land beneath their houses? And how have these processes and prices been affected by recent massive investments in infrastructure upgrading and pacification policing? This chapter explores how real estate transactions in the informal sector compare with those in the formal sector and how the line between them is becoming blurred. The author draws upon original research she conducted in the favelas of Rio de Janeiro over the course of almost fifty years. The deep understanding that grounds the chapter comes from the author’s longitudinal research in Rio’s favelas from 1968 to 2008 (Perlman 1976, 2010b). For her original study in 1968–69, she lived in three favelas for six months each, during the height of the military dictatorship in Brazil. She selected one favela (Catacumba) from the upscale South Zone; one favela (Nova Brasilia) from the industrial North Zone; and several smaller favelas and subdivisions from Duque de Caxias in the more remote Baixada Fluminense. In each of these three locations, she

Informal Real Estate in Rio’s Favelas

59

interviewed (with the help of a local team she trained) 250 people—200 chosen at random and 50 leaders chosen by their position. Thirty years later, she was able to locate and interview over 40 percent of the original study participants as well as a random samples of their children and their grandchildren. To complete the study and test for bias that may have been introduced by the nature of those people she was able to find, she drew new random samples of 1,000 people in each of the three locations and new leadership samples of 25 in each. The results confirmed that there had been no systematic distortion of findings.1 Another study, launched in 2009, was specifically on the topic of real estate transactions in favelas. That study was based on interviews with buyers, sellers, and Residents Association (RA) officers in twelve favelas, as well as with real estate agents, lawyers, and city registrars.2 A separate but related study was on the PAC (Accelerated Growth Program) and the UPP (Pacifying Police Units) from the viewpoint of favela residents, leaders, shopkeepers, and young people.3

Informality—The New Majority Given the existing housing deficit and the inability of the state or the market to keep pace with the level of growth at prices within reach of the newcomers, most migrants have no choice but to build their own homes and communities as best they can on lands that for a variety of reasons are unoccupied and unprotected. They have come to the city in pursuit of greater choice and opportunity—if not for them, then for their children—and they have sacrificed to do so. How to deal with urban informal settlements is one of the defi ning policy challenges of our times. There are already one billion people living in self-built communities, and that number is expected to double by 2030 and triple by 2050, representing one of every three people in the world (United Nations Secretariat 2013). Our collective ability to understand and deal with these marginalized populations will determine our ability to create sustainable, safe, and productive cities.

Rio of a Thousand Favelas Brazil is one of the most urbanized countries in the world, with 84 percent of its population living in cities. Latin America, by comparison, is

60

Anthropological Perspectives

77  percent urban, while the United States is between 80 and  81  percent urban. All metropolitan regions of Brazil have sizable favela populations, but Rio has the largest as well as some of the largest favelas in the country. The current figures, based on the 2010 census, show that Rio has over a thousand favela communities, which can be clustered into 763 larger favela complexes. Together they are home to roughly 1.4 million residents, 23 percent of Rio’s municipal population.4 The next largest favela population is in São Paulo, which has 1,280,400 favela residents (Instituto Brasileiro de Geografia e Estatistica [IBGE] fi ndings from 2010 census in Hurrell 2011). Rio’s urban growth spurt began in the 1950s, and since then, the growth of favelas has outpaced the growth of the city as a whole in every decade (IBGE 2014). The one exception occurred in the 1970s when the national government, then a military dictatorship, forcibly evicted favela residents. From 2000 to 2010, Rio’s favelas grew at 28 percent while the city of Rio, minus the favelas, grew only 3.4 percent (Galdo 2011). This discrepancy reflected a national trend. In that decade, the country’s annual urban population growth was only 1.63 percent, but favelas grew at an annual rate of 4.2 percent, increasing the country’s favela population from 6.5 to 11.4 million people. This signifies that favelas are likely to continue to grow at an accelerated pace even as annual urban growth remains low. Since Brazil’s return to democracy in 1985, after twenty years of military dictatorship, favela removal has been largely avoided as political parties and candidates compete for votes. The new Constitution of 1988 and the City Statute in 2001 guarantee the right to decent housing, as well as the broader “right to the city” with all of its amenities, and mandate participatory urban planning at the local level. One of the first attempts to give land title to favela residents was Cada Familia Um Lote (Every Family a Plot of Land), a state program launched in 1983 by Rio State Governor Leonel Brizola upon his return from exile. The program was short lived and limited in scope, but, to this day, the few families who received land titles through the program continue to pay urban property taxes (Impoasto Predial e Territorial Urbano, or IPTU). Later city programs such as Mutirão—collective self-help or mutual aid—and Reflorestamento—which paid community residents, for the first time, a minimum wage by the city government to work to upgrade their communities (rather than being expected to work for free, under the label “sweat equity”)—

Informal Real Estate in Rio’s Favelas

61

made some attempts to regularize land ownership. However, little progress was made because, legally, each plot had to be researched and adjudicated individually, which is a nearly endless task due to the scarcity of written documentation and the contested and competing claims over title documents where they do exist. In 1995, Favela-Bairro, a large-scale upgrading program, was launched in Rio with support from the Inter-American Development Bank, the Caixa Econômica Federal (Brazilian National Bank), and the City of Rio. It started in fifteen favelas and went through three phases of five years each, eventually spending US$180 million to integrate favelas into the fabric of the city through infrastructure upgrading and ser vice increases and reaching 253,000 residents in seventy-three communities (Special Interest Group in Urban Settlement 2014). Yet, even in these areas, the issue of land regularization proved exceedingly complicated. Land ownership of many parcels was contested among the descendants of private owners who claimed to have historical deeds. Under existing land-use laws, these claims have to be adjudicated parcel by parcel, so no overall resolution of land tenure for the entire community was possible. The city office of the attorney general is in charge of these cases, and it had an interminable backlog of pending cases. There seemed to be no end in sight. Nonetheless, the Favela-Bairro communities were a step closer to legitimacy than similar longtime communities, which had become “consolidated” in the absence of any public programs.5 With attempts to regularize land ownership stalling, the Rio city government took a different approach to bring the Favela-Bairro communities closer to legitimacy. Local ser vice centers called Pousos were established beginning in 1996 to help regularize the right to occupy the dwellings. The Pousos had a city-paid staff of architects, engineers, and social workers whose main function was to verify the safety standards and provide an occupancy permit, called Habite-Se. This is not a title, but it is a document with the name of the family and the address of the dwelling. Should environmental risk or the right of eminent domain be used to remove that dwelling, the city is obligated to provide replacement housing, although without guarantee of proximity. Another city program, Morar Carioca, was launched in 2010 to continue the work of Favela-Bairro; its intention is to upgrade all of the city’s favelas (those with over a hundred homes) by 2020. The project, however, is stalled and the fate of the favelas uncertain.

62

Anthropological Perspectives

Since 2007, the Brazilian government has made a massive investment in the PAC, an infrastructure development project and a stimulus for the construction industry. In Rio, the PAC has a slum upgrading component, targeting the largest favelas and favela complexes.6 Minha Casa, Minha Verde, a program launched in 2009 and intended to reduce the nation’s housing deficit and to provide better housing for Brazilians living in suboptimal conditions, is funded largely through the PAC. The program has run into many of the same problems as earlier, local efforts. It has been less than successful at reaching the families most in need, and, when housing is built, it is often far from work, schools, health care, and other urban physical and social infrastructure. Despite the billions invested in the PAC, the infrastructure upgrading appears to have had limited impact on real estate prices in the favela (although see in Figure 4.1 the observed increase in prices in favelas overall). Internal prices skyrocketed with the occupation by the units of pacifying police (UPPs) starting in 2008 in the favela of Santa Marta; there are now thirty-six units installed in forty-nine favelas, reaching what they claim to be 1.5 million people (Ribeiro 2013).7 The idea of the program was to reassert the control of the state over the favela territories, which had become dominated by competing gangs of drug traffickers. The focus of the UPPs is zero tolerance for arms, which is enforced by patrolling the communities on a full-time basis. The locations of these thirty-six units are in the areas where the World Cup was hosted in 2014 and where the Olympic Games will be hosted in 2016. According to the most recent reports, there are still 370 favelas controlled by the drug gangs and 488 controlled by the militias, composed of off-duty police and firefighters. The residents of the communities have responded with great relief at being able to “come and go freely”— some of them for the first time in their lives. But they do not believe that this state protection (or control, as some see it) will last beyond 2016 once the Olympics are over. Some twenty years since the start of Favela-Bairro in 1995, we are seeing the fragility of favela claims, particularly for those proximate to the sites for the World Cup and Olympic Games. The residents are once again engaged in a desperate struggle against eviction. Perhaps the best-known case is Vila Autódromo, located next to the site of the Olympic Park, which has been fighting for the right to remain in place for the past three to four years. Working with university students and nongovernmental organizations, the community developed an alternative plan for upgrading on site, which recently

Informal Real Estate in Rio’s Favelas

63

won the Deutsche Bank Urban Age Award (Steiker-Ginzberg 2013). Still, the current plans for eviction seem to be proceeding.

Who Owns the Land? As is clear from the above discussion, Rio’s favelas are in a state of legal limbo. For the most part, residents have de facto security to remain where they are, but they do not have de jure land titles; so they remain dependent upon political whim and will. As seen in Vila Autódromo, locations where the government has an overriding interest are not finding it easy to negotiate for a mutually satisfactory solution. Ownership is a relative concept in the favelas: less like a designation, more like a continuum. Favela dwellings typically started out as small shacks (barracos) made of wattle and daub or wood, cardboard, and other kinds of scrap materials. Over time, the families expand and improve these dwellings incrementally following family needs. New stories grow upward, and new rooms are pushed outward—in the back or on the sides. Bater um laje, adding another story to one’s home, is almost a constant process.8 The house is the main, often only, family asset and provides sources of income from rentals, commerce, and services (day care, hair and nail salons, equipment repair) to small-scale production. In self-built communities on invaded land, one would not expect there to be a history of written title documents, formal or informal. In my longitudinal study, I asked over two thousand favela residents whether and what kind of title they had. Some 70 percent said “no title”; 20 percent said “informal title” (including a handwritten note of sale from a previous nontitled owner or a receipt for a paid electricity bill); and another 6 percent thought they had formal title (such as a certificate from a previous administration or a note from the RA). The rest did not know. None were paying urban property tax (IPTU, and I do not believe any of the documents would stand up in a court of law (Perlman 2010b: 298–300). In fact, in Catacumba, a favela that was forcibly removed in 1970, there were one or two families of original owners dating from the 1930s who had purchased a parcel of land (sítio) from a larger plot that had been granted to the workers by the baron who had the concession from the Portuguese. All their papers were in order and legal; but when the favela was removed, these documents were tossed aside and the family was neither indemnified nor

64

Anthropological Perspectives

allowed to take their improvements to another location. They were put in the garbage trucks with all the other families and assigned to small apartments in the distant housing projects where their rental payments over thirty years would enable them to purchase these units. There is no transparency in ownership of the favela lands, with much of it in dispute among various parties. However, the federal government, the navy, and the church seem to be the largest owners. Privately owned lands, whether individual or corporate, were less likely to have overlooked the attempted invasions and more likely to have evicted settlers or bargained with them before a community was established. In some cases, such as Nova Brasilia, the Tuff y Factory was the landowner and gave the original group of squatters permission to use a designated portion of the land in return for protecting the boundaries from further settlement. Aerial photos show that this arrangement has persisted to this day. Likewise, in Vila Operária, in Caxias, a wealthy owner had given part of his lands to the first group of intrepid workers who built their community there in the swamp. They have the original documents with his signature, but since his death, they have been treated as illegal occupiers.

Buying a House in a Favela The RA is responsible for most matters within the favela, including real estate transactions. They are the liaison between the community and the state. Starting in the 1960s, each favela in Rio was required by city government to create a RA to negotiate on behalf of the community at large. There were too many separate groups with different demands sending delegations to plead their causes at city hall. As Zoraide, a lawyer who works in the favela of Borel put it, “The associations have fé público (public trust/faith) meaning that they act as the municipally recognized local government within the favela territory. They act as the government’s arm within the area and in that capacity have the right to authorize land transactions.”9 The headquarters buildings of these associations serve as locations for meetings, health or dental clinics, sports centers, and places to keep community records. They are located near the main entrance to the favela or at a central point of easy access. Dues-paying members receive certain benefits, such as mail delivery, as the postal ser vice did not, and still does not, deliver

Informal Real Estate in Rio’s Favelas

65

mail within the favelas. Up through the mid-1980s to the mid-1990s, the president and officers of the RAs were elected by popular vote and accountable to the community. They served for fi xed terms and were not reelected if they did not work on behalf of community needs. This changed when the drug traffic began to enter the favelas, which were a convenient hiding place due to the narrow winding alleyways and the lack of police protection. The favelas had become no-man’s-lands. As the sale of drugs and arms increased, territorial control became more lucrative, and the drug gangs began to take over the RAs by driving out or killing the elected presidents. By 2005, the majority of favelas were under the control of the drug traffickers, and most of the others were controlled by militias.

How Buyers and Sellers Find Each Other

Houses for sale in favelas do not appear in the classified sections of newspapers or on the Internet. They are mostly found by word of mouth (boca a boca) and through the RAs, which have a wall or a tack board where for-sale signs can be posted. These range from scraps of paper with handwritten notes to nicely formatted computer printouts. Word of mouth works quite effectively since even in the larger favelas, everyone knows everyone else and keeps abreast of comings and goings. If someone wants to sell his or her house or a backyard cottage behind the house, neighbors, friends, and relatives know first; then the word spreads and soon the entire community is aware. “For Sale” signs are visible on the home’s front or in the front window.

* * * Rocinha and Vidigal occupy the prime real estate locations of all the favelas in Rio, set into the hillsides along the only roads between the fashionable Leblon and Lagoa neighborhoods of the South Zone and the upscale São Conrado—beyond which is the new Miami-style development of Barra de Tijuca. These favelas have become famous in the past decade for their extraordinary views, vibrant music and dance cultures, jeep tours, and visits by dignitaries from rock stars to presidents to the pope. When I asked Marlene, a Rocinha resident, how she would let people know if she wanted to sell her home, she said she would never want to sell her house; but if she did, she would let people know by “putting up printed flyers in the street, on walls,

66

Anthropological Perspectives

light posts, and on the street-facing side of her home. . . . Then there is the Residents’ Association where you can lists sales and an agenciazinha (little storefront agency) where you can post notice of what you want to sell. We don’t use corretores (real estate agents) because they charge the buyer a large percentage of the sale. If you put your own name and number on the flyer, interested people can contact you directly.” Only in Vidigal did I find an informal, locally run real estate agency, open by appointment only, and that was connected to a German investor in the process of purchasing dozens of homes there. The person he hired to run it was a former ambulatory beach vendor whose beat was Ipanema. The idea was that foreigners with lots of money would be willing to assume the risk (both of violence and of losing their investment if the government expropriates the land) for the benefits of living there. The one-room “office” with a desk, two chairs, and some maps on the wall was intended to give potential buyers, from the outside, the impression that they were not dealing with the drug traffic—but all transactions are subject to the signature of the RA president, who was placed in that position by the dominant gang at the time. WHO’S SELLING

In general, turnover is low in the favelas. In fact, half of the 750 people I interviewed in 1969 were still living in the same place thirty years later. The major reason for leaving has been to escape the violence, particularly to protect the children and to keep teenagers out of harm’s way. Sometimes, people are compelled to leave by a mixture of desire for safety plus the need for more space or because a spouse comes from another area. If both husband and wife were born and raised in the same community, however, it is rare that they will sell unless forced to do so. The sellers are generally families who are in financial straits or whose circumstances have changed dramatically. There is no safety net in the favelas. Any crisis such as an accident, illness, or the death of the main breadwinner can change the survival strategy. A disaster for one family that forces a move to a smaller, cheaper, or more remote residence may be counterbalanced by better days for another family looking for a larger or better-situated place. WHO’S BUYING?

In most cases, the buyers are people already living in the community, people related to a person from that community, or people who know families in the community. Grown children with families of their own may want a

Informal Real Estate in Rio’s Favelas

67

separate house close to the family, or a divorced couple might need two smaller houses, or a widowed woman may move to a smaller house or one better configured for rental. Some residents acquire several houses that they rent out to pay their expenses. In the newer communities, particularly in the West Zone, prices are very low, and buyers are likely to be recent migrants from the Northeast, particularly the state of Paraíba, one of the poorest regions in Brazil. A daily bus arrives from the capital of Paraíba to the City of God, a neighborhood founded in 1960, in Jacarepaguá. People need an inexpensive place to live and a place to find work when they arrive. In earlier times, they found a small settlement where they knew someone and built their shack. Today, they might be enticed into a clandestine subdivision on the promise of easy ownership, or they might start by renting a small house or part of a house in a well-located favela until they can find work and save enough to buy. In the highly developed, well-located favelas of the South Zone, housing is always in high demand, something that has increased dramatically where UPPs have been installed. In the fi rst of those, Santa Marta, Babilônia, Chapéu Mangueira, and Cantagalo-Pavão-Pavãozinho, there has been interest from outsiders and discussion has begun about how to respond to this (see “Will Gentrification Accomplish What Policy Could Not?” below for additional discussion).

How Prices Are Determined

As in the formal city, the market price in favelas depends on supply and demand. For internal sales, there is general consensus among local residents about the value of any given property at any given time. (This may not hold when the buyer is from outside the community and especially from outside the country.) The seller and buyer agree on “fair market value” based on four sets of criteria: the location of the favela within the city, the location of the dwelling within that favela, the nature of the house and land, and the urgency of the sale. The desirability of favela location is predominantly determined by proximity to the upscale residential areas of the city where jobs are plentiful and access to social ser vices is better. But even within the same geographical area, favelas may differ in the degree of personal safety and security each offers and the relative risk for removal. Favelas that were part of Favela-Bairro or the PAC are less likely to be eradicated, and those with a UPP have seen prices

68

Anthropological Perspectives

skyrocket despite the residents’ doubts that the UPP program will continue after the Olympics in 2016. Within the favela, the same considerations are relevant: how close is the house to the main street and to access to transportation? How vulnerable is that part of the favela to violence by gangs, militias, or police? And how high is the risk for removal in that section of the favela? If it is in an area considered an environmental risk or a desirable location for public works, it may drop in value. On the other hand, some families kept the title documents from previous government programs and have been paying property taxes (IPTU), making those properties more desirable (Perlman 2010a).10 Houses and quintal—the backyard—vary significantly in size, quality, light, ventilation, and amenities. Materials may vary from stucco, wood, and tin in shacks fi lling in space between existing dwellings to multistory brick palaces with tiled floors, large gardens, and spectacular views. Finally, the length of time the property has been on the market and the urgency of the sale affect the asking price. If the family is receiving death threats from local gang members, or is expecting a baby, or has lost the main breadwinner of the family, the house may be sold for less than market value.

The Real Estate Transaction

“When you want to sell your house and find a buyer, you go to the Residents’ Association to take care of it,” explained Dona Alaide of Babilônia. “The association will check to be sure all of the documents are in order. You’re supposed to show them something that proves you are the rightful owner, which is a problem if your parents or grandparents built the house—and you do not have any documents.”11 The RAs have authority vested in them by city government to manage matters within the communities, including real estate transactions. The process is fairly similar in all favelas. The RAs issue the sale and purchase document—the promessa de compra e venda (a promise to buy and sell). The president and officers of the RA are expected to keep track of who lives where and who “occupies” what property in their community. This is a simple matter since they were born and raised in the community, so they know which family has what property, written documents notwithstanding. The standard procedure is that the buyer, seller, and two witnesses sign the sales agreement at the RA office. The witnesses are usually neighbors who

Informal Real Estate in Rio’s Favelas

69

can verify that the seller is the resident and that the property lines, boundaries, and description of the house are correct. The president then signs, dates, and seals the document, using the rubber stamp of the RA. This makes the contract semiofficial in the unofficial world of informality. It is uncertain whether the document would be recognized in a court of law since the transaction authorizes the sale of an illegally occupied property. To get around this by saying the sale is of the improvements only is not exactly what the buyer expects. I was surprised to see a recent article in the Financial Times admonish would-be buyers of favela homes to be sure to check the title in the RA office (Steele 2013). The sales document is printed on the RA stationery with its logo on the upper left-hand corner and letterhead across the top. An example, from Vidigal in 2009, with the letterhead of the RA president at that time, is translated into English below. An addendum attached to the sale document describes the property and includes a detailed description of the location, specifications of the property size and boundaries, the material of construction and condition of the house, the size of the house, the number of rooms in total and of bedrooms and bathrooms specifically, and the existence of any other improvements on the land. Ownership changes hands when the price is paid in full—almost always in cash. As Jair from Cantagalo explained, You almost always pay a vista, with money in hand. Sometimes, if you are muito amigo (very close friends) with the sellers they will accept payment in a few installments, but usually it all must be paid in full at the time of the sale. It’s difficult for any of us to get a loan. Usually people will work for many, many years to make enough money to buy a house like this. We cannot get loans. For loans, you need all kinds of documents such as identity cards, property title, proof of employment, assessment of how much your house is worth, and so on. We do not have these, so normally people here do not even try to get loans. Since there are no legal titles, one wonders how real estate disputes are resolved in the favelas. In the case that either the seller or buyer has not kept his or her word, there is no recourse to the law. These matters are handled by the RA or the dispute resolution center (if there is one). If that fails, things are taken care of by extrajudicial use of force. Physical threat

70

Anthropological Perspectives

RESIDENTS ASSOCIATION of the VILA of VIDIGAL Registration number of the Residents Association, Telephone number, Address Considered as a public entity by state law # 2348—10/10/1994 I, (name) a Brazilian, bearer of the identity card (#) and the CPF, (#), resident of (address) in Vidigal, Rio de Janeiro RJ, herein referred to simply as “the seller”, have lived in this house for (# of years) declare that I am hereby transferring, with all improvements, the property located at the address (street name and number) VIDIGAL-Rio de Janeiro- RJ to Mr(s). (Name), a Brazilian, bearer of the identity card (#) and CFP (#), from here on known as the buyer/owner. The price of this sale is (sum in reais) being effective according to the agreement of both parties. The property consisting of (description attached) is transferred starting on this date upon the registration of the property in the category of an improvement and registered in this Association. For legal purposes, I have no objection to the sale of this property. As proof that this is true, there are witnesses: 1st Witness: name and ID # 2nd Witness: name and ID# We declare having verified the physical space cited above with the commission of buildings of this Residents’ Association, which assumes all responsibility with the signing of this transfer registration. Rio de Janeiro, 21 of May of 2009

(seller)

(buyer-new owner)

(witness #1)

(witness #2)

(signature of President of Residents Association, Jose Valdir Correia Cavalcante, President of the Residents Association of the Vila of Vidigal)

Informal Real Estate in Rio’s Favelas

71

backed up by the power to infl ict harm is the ultimate enforcer of the nonbinding contract. There is total impunity. No government agency, no police, no juridical process will get involved in an internal homicide within a favela.12

The Mystery of the Cartório

When I set out to uncover the process of real estate transactions in favelas, I heard a lot about registering the sales at the cartório (registry). I was told that once the sales contract was signed, the buyer would go “to the cartório” to register it. I discovered that there were eleven cartórios in Rio, all but one in the center of the city and the main one on Avenida Rio Branco. When calling for an appointment proved impossible, I went downtown and found myself in front of an imposing gray building in classical style. There was no information in the entry hall and no indication of whether this was the right place or not. As I waited for the elevator to the seventh floor (per the address from my web search), it was easy to imagine how intimidating this would be to favela residents, many of whom had never even been downtown. The vast hall was dimly lit and eerily quiet as people waited in long lines in front of each of several barred windows, similar to those protecting bank tellers. Being light skinned and (relatively) well dressed, I blended in well as I waited my turn on one of the lines. When my turn came, I explained that I was an American interested in buying a house in a favela and was seeking information about what I needed to bring to the cartório to make the sale official. It took a fair amount of back and forth questioning for the woman to understand my question—and when she finally did, she looked at me in utter disbelief and said that it was impossible for any favela home to ever be registered at the cartório because to do so you needed definitive title and legal proof of ownership. That was very confusing: I was sure I had heard correctly about the cartório. I asked if any of the other ten branches dealt with favela properties and was assured that they did not. In the formal sector, all properties and property transactions (compras e vendas) must be registered in this kind of Cartório de Registro de Imóveis (Real Estate Registry). Each of the eleven registries is responsible for a district within the city. To buy or sell any property, one needs a Carteira de

72

Anthropological Perspectives

Identidade (ID card); Certidão de Pessoa Física (CPF, an individual as opposed to corporate certificate); and—if fi nancing is involved—a ContraCheque (cashed salary check) to ensure that you have a steady source of income (formal employment) and that the loan payments will not exceed one third of your income. This was certainly not the case for sales inside favelas. Yet no one seemed to know about any other registry that served informal settlements. I only found out, by pestering everyone I spoke with, that there was a cartório in Ipanema, right on the side of the Praça General Osorio, where I had been going to the crafts fair (hippie fair) every Sunday whenever I was in Rio. It was a weekday, and so I went right over and got in the line snaking out the door. It was the sixteenth region where I was, which includes the favelas of Vidigal and Rocinha as well as all other favelas in the area from Ipanema to São Conrado. That was how I learned about the Cartórios de Registro de Títulos e Documentos (Registry for Titles and Documents). In each region, these are the cartórios that register documentation from identity cards, to birth and death certificates, to marriage licenses, to new companies or corporations. They keep records of the “power of attorney” for apartment rental contracts and verify the signature of officers of corporations, which they keep on file. These are private enterprises based on concessions, handed down through families, but they perform a quasipublic function. It is a lucrative business as fees are collected for each transaction and the owner of the concession retains a percentage of every fee. Having resolved the mystery of the missing cartório, I learned about the bizarre arrangement whereby the signatures of favela RA presidents are registered at the Cartório de Registro de Títulos e Documentos in the district where they are located. Verifying their signatures is business as usual. The signators of the sales contract come to the cartório and pay twenty dollars to verify the signature of the RA president. In decades past, RA presidents were longtime community members: well known, trusted, and openly elected. What makes this surreal is that now so many of these presidents are designated by drug lords or installed by the militias. Even when the RA is controlled by a known criminal put in place by a known drug don, the president is officially responsible for the community, and it is his personal signature that provides legitimacy to real estate transactions in the community. When the RA president is killed (which is often the case when another faction takes over the community), the new president

Informal Real Estate in Rio’s Favelas

73

goes to this same cartório and registers his signature, which then becomes the official one. This quasilegalization of an extralegal property transfer blurs the boundaries between legitimate and illegitimate. It is a kind of perverse formalization of the informal sector, which leaves the urban poor without protection of the law while offering a veneer of legitimacy.

Unintended Consequences of Peace Ten years ago, it was surprising to learn that space in the best favelas was renting for a higher price per square foot than in many areas of Copacabana or Botafogo. There was simply greater demand and more limited supply. Five years ago, when I wanted to learn how real estate really worked inside the favelas, I pretended that I was looking for a house to buy in a favela. If I were willing to live in the North Zone, I would be able to buy a small house for about $7,500. That would involve a clear risk for my personal safety and a very long and crowded commute to downtown or the South Zone. If I was interested in something better located, such as in Rocinha or Vidigal, the price might be ten times that, $75,000. I arranged to see several houses but found none that I fell in love with for the price. It already seemed very expensive to me. But that was only the beginning. By 2011, after the UPP had been installed in several South Zone favelas, including Rocinha, and the national army had occupied the Complexo de Alemão in the North Zone, rents had increased 6.8 percent more than rents in the formal market (Neri 2011). Since then, prices have continued to rise, and the press has been full of articles about favela families renting out rooms for tourists and World Cup aficionados, ranging from US$5 per night to US$100 per night and upward from there. A 2012 article in the Brazilian newspaper O Globo reported that rent for a small house in Vidigal had risen from US$300 per month before the UPP to US$750 per month after, while rent for a similarly sized space in Cantagalo went from US$150 per month pre-UPP to US$350 per month post-UPP (Jansen 2012). In January 2013, Fox News Latino reported on a local real estate agent who claimed that a number of $25,000 properties he had just sold would not have fetched $5,000 a few years before (“Rio de Janeiro’s ‘Favelas’ ” 2013). And in September 2013, the Financial Times cited another Rio real estate agent who estimated that housing prices in pacified favelas had risen 40 percent since pacification (Steele 2013).

74

Anthropological Perspectives

600 500 400 Average of sale price 2003

300

Average of sale price 2012

200 100 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Figure 4.1. Average change in price per square meter from 2003 to 2012 in seven favelas (Babilônia, Batam, Chapéu Mangueira, Asa Branca, Maré-Parque Rubens Vaz, Santa Marta, and São Carlos-Mineira). Source: Scruggs and Acoca-Pidolle (2013).

Scruggs and Acoca-Pidolle’s working paper (2013) tracks prices in seven Rio favelas, five of which received UPPs between 2008 and 2011. Figure 4.1 shows changes in the average square meter price of real estate in the seven favelas in nominal and 2012 prices (Scruggs and Acoca-Pidolle 2013). The weakness of these findings is that mixing favelas with and without UPPs muddies the effect. A comparison of price changes in favelas with UPPs and without UPPs would be more useful, particularly if broken down by South, North, and West Zones of the city. According to Pedro Abramo, the leading expert in real estate markets in Rio, the most dramatic rise in real estate prices has not been inside the favelas but in the formal city all around them. His most recent study showed that prices in the informal real estate market have certainly increased with the installation of UPPs, but that overall those prices followed the rise in Rio de Janeiro’s real estate market as a whole—and that the skyrocketing prices were in the formal neighborhoods near UPPs (Abramo 2012). For example, the beachside neighborhood of Ipanema in the Rio South Zone has seen a real estate frenzy since the installation of a UPP in the adjacent Pavão-Pavãozinho-Cantagalo community in 2009. In April 2008, a fourbedroom house in Ipanema sold for an average of US$380,578, while in

Informal Real Estate in Rio’s Favelas

75

August 2011, a four-bedroom home in Ipanema sold for an average of US$1,731,058, an increase of 455 percent (Gonzalez 2012). The Getulio Vargas Foundation in Rio undertook a study showing the evolution of sales prices and of rental prices of two-bedroom apartments in four neighborhoods from 2007 to 2010, following the installations of UPPs in nearby favelas. The neighborhoods are Botafogo-Humaitá after the UPP in Santa Marta; Copacabana-Leme after the UPP in Chapéu MangueiraBabilônia; Jacarepaguá after the UPP in Cidade de Deus; and Ipanema after the UPP in Pavão-Pavãozinho-Cantagalo (Gonzalez 2012). While the study showed an unsteady rise in prices and rents from 2007 to 2010, during which period several UPPs were established, these are mixed results that do not impute causality. There were many other factors influencing purchase and rental prices at that time, and Rio as a whole enjoyed fast growth during this period. Aside from the installation of UPPs, there was an oil and gas boom in Rio, the announcement of the city’s hosting the World Cup and Olympic Games, broad economic growth in Brazil, and a rare confluence of political party alliances among the national, state, and local governments. A 2012 study by the Federal Reserve Bank of New York showed that price levels for house and apartment sales in Rio rose 100 percent from 2008 to 2011 and that the UPP program citywide accounted for 15 percent of that price growth (Frischtak and Mandel 2012).

Vidigal is a particularly well-located favela between the two richest areas of the city—the old wealth in the South Zone (Ipanema, Leblon, Lagoa, Alta Gávea) and the new wealth along the coastline, including São Conrado and Barra de Tijuca. It sits atop a tropical forest hillside that provides spectacular views of the ocean, the fresh water Lagoa, the Corcovado, and the city. In any other city, the elite would occupy this real estate. In Rio, it is a favela, although on the right side of the main entrance street, properties are legitimately owned and were once occupied by famous artists and musicians, including Gal Costa and Caetano Veloso. Although there were a few rentals and even small bed and breakfasts catering to young European and American travelers, the purchase of thirty-seven properties in 2009 by a wealthy German businessman named Rolf Glaser was big news (Dantas 2009). His plan was to transform Vidigal into a tropical Positano, starting with a European-style “pension” that would be ser viced by local residents. When I interviewed him in June 2009, he said Vidigal was “the next hottest real estate property in Rio.” He took me around on his motorcycle to show me several properties as well as his own palatial compound at the top of the hill.

76

Anthropological Perspectives

He had created a nonprofit organization called Vidigal Feliz (Happy Vidigal). Each of his properties had a painted sign on the front, identifying it with a number and the designation as a nongovernmental organization. When the city authorities learned of this, they issued a stop-work order forbidding development of any of his properties until they could investigate the matter. A few months later, the way was cleared for him to continue his project. He apparently reached an agreement with the city government that stipulated that he could go ahead with his building project as long as any improvements made or jobs created in the process would be attributed to the mayor and to his political party. Four months later the city government reversed its position once more and denied permission to proceed with his project. There are two versions of what happened: the first version holds that Glaser did nothing too far from the ordinary. Some favela families in Rocinha and Vidigal had acquired several properties to rent out. The irregularities of buying a property without a title, starting a business without registration, and avoiding property taxes could be seen as regularities in the local context. In this version of the story, Glaser’s big mistake was to agree to do an interview for the cover story of the Sunday Magazine of the most widely read newspaper in Rio, O Globo, the equivalent of the Sunday New York Times Magazine. Evidently, this caught the attention of the municipal government officials: some say it was a direct aff ront to the city government. As a consequence, Glaser was fined and barred from continuing any project in Vidigal, so he left. The second version is that he had to pay the local drug dealers for protection on each property and that they began charging him more and more, with threats getting increasingly bold, until it became impossible for him to continue. In either case, he put up his properties for sale and disappeared. That is now ancient history.

Will Gentrification Accomplish What Policy Could Not? The more things change, the more they stay the same.13

Vidigal is now brimming with chic posadas (bed and breakfasts) that took bookings for the World Cup (Romero 2013). Online booking sites are sophisticated and attractive, with photographs of spectacular views, comfy hammocks on plant-filled verandas, an occasional swimming pool, and a plethora of enticing home-cooked dishes. Even before all hotel rooms within commuting distance were sold out or extravagantly overpriced, some visitors seeking a “more authentic experience” booked rooms online in the favelas. The idea of building a hotel at the top of the hill did not disappear with Glaser.

Informal Real Estate in Rio’s Favelas

77

A luxury hotel was constructed at the top of the hill, for which a new road is being built, demolishing the forty homes in its path. In response to community protest, the builder sent a message that it is only a “boutique hostel,” not a five-star hotel (Albanese 2012; Galbany 2012). At a January 2014 community meeting, one resident is quoted as saying, “After all the bloodshed here, sticking it out through gang wars and police raids, now we have a chance to live in peace—but will we be here to enjoy that?” Another was furious that residents were being prohibited from making improvements to their homes while outside developers continued building hotels right in front of their eyes. For example, the aforementioned boutique hotel, Mirante do Arvrão, opened in December 2013 and offers accommodation and sea views from the top of Vidigal for US$25 to $150 per night. People are worried about the loss of identity. One person said, “Before it was like a village, we all watched out for each other. . . . We had our privacy. . . . Now they want to buy us out.” Many echoed the sentiment, “I love it here and I cannot imagine ever leaving” (Isensee 2014). Residents in all of the pacified favelas are concerned about this new kind of passive eviction—what they call expulsão branco, or white expulsion, in contrast to the active government evictions during the military dictatorship. They have no experience with collective action as a method to fight being gentrified out. Th is has become the active topic of discussion among those concerned with the future of the favelas (Paiva 2013). At Santa Marta, the first UPP favela, many residents spoke to me about the pleasure of being able to sit out in front of their houses after dark without fear and listen to music on the radio, but they fear something else. One woman was recently quoted as fearing for her community and fearing the white expulsion: “We end up joking around, but really the people here will not have the conditions to pay” (Ost 2012). In the Morro de Babilônia, also among the first UPP favelas, people told me they had been besieged by outsiders coming by, trying to find out who owns what property and which ones would potentially be for sale—saying they were like vultures eyeing their prey. In response, the RA held a community meeting to decide how to protect the community; they were considering a ban on sales to anyone from outside. In Cantagalo, a mother of young children told me that when her family grows and needs more space, the prices will be too high and they will have to move out to a cheaper location. She worried that her friends and neighbors would sell to outsiders for seemingly large amounts, only to find that

78

Anthropological Perspectives

they could not afford to buy any other property near their work nor could they afford to return to Cantagalo. In every case, it is much worse for the renters than the owner-occupiers. An estimated 22 percent of people living in the favelas are renting (Lonardoni and Bolay 2013). They are the most vulnerable and will certainly face steep increases due to the competition. What will happen to them when they can no longer afford the rising rents? There is a cruel turnaround in this story. One of the striking findings from my decades of research was that the biggest change from 1968 to 2007 was the violence, the drug traffic using the favela space as a place to deal, and the heavily armed gangs. I wrote that the fear of being killed in the crossfire had replaced the fear of being evicted from their homes (Perlman 2010b). Now that may no longer be true. The very success of the disarmament inside the UPP favelas has meant they are facing a new type of eviction, a real estate market eviction. As an unintended consequence of personal safety and security, the residents are once again at risk of losing their homes and communities.

Land Title, Only Thirty Years Too Late The main message in my first book, The Myth of Marginality, was that the bulldozing of the favelas was a self-defeating policy and that if the residents were given land tenure, they would create thriving working-class neighborhoods integrated into the rest of the city (Perlman 1976). By the time I started the follow-up study, that was no longer the case. The de facto tenure had provided sufficient security so that residents could invest in their homes without fear of the bulldozer. Instead, by the time the policy community had come around to promoting land title as the solution and the use of the legally owned home as collateral for loans, most residents wanted little to do with it. They did not want to incur the cost of property taxes, they did not want to be regulated, and they had no interest in taking out loans from banks, which they did not trust. So about the time that the government was working on land tenure, and the Light Company, a private public utility company, was beginning to regularize ser vice and charge accordingly, many favela residents were enjoying their informal status. What they most wanted in life was not land tenure or improved urban infrastructure but work—decent work for decent pay—whether emprego or trabalho (as employees with a job or self-employed) (Perlman 2010b).

Informal Real Estate in Rio’s Favelas

79

It is in this context that the news about real estate in the favelas was reported. The headline in the Rio Times on the last day of 2013 read “Estimated 23% of Rio Favela Homes to Be Legalized” (Forte 2013). Rio State Governor Serio Cabral had announced that 103,000 homes in pacified favelas had been entered into the process of regularization and would be legalized in the next five years. The first 13,000 were slated for Rocinha and Vidigal, although the program has run into serious snags since the enabling legislation passed in May 2013. Of the 103,000 properties, some 34,000 are under the control of the State Housing Secretariat, and 68,000 are under the Municipal Housing Secretariat. For privately owned land, concession titles, such as ninety-nine-year leases, will be used; the idea is to make them renewable for another ninetynine years if the state has not paid in full for the purchase of the acquired area. The Institute of Land and Cartography of the State of Rio (ITERJ), a state agency, is responsible for regularization of 43,000 favela properties (Forte 2013). ITERJ director Mayumi Sone (2014) said the institute did not have the capacity to achieve that goal within the time frame. “In the past we handled at most 1,500 regularization procedures per year; now we have 10,000 a year . . . and we are expecting 66,000 more next year.” In dealing with informal settlements, the logic of the state and the logic of the market are exactly the same. The government policies of removal target the best-located favelas first, clearing the land for its “highest and best use.” The communities that successfully fought against removal and managed to outlive the dictatorship were the first to be “pacified” and will be the first to receive title. If uncontrolled, the market will determine who can afford the privilege of occupying such hotly contested space. If indeed land titles are transferred, the Gordian knot will be ensuring that the process will ultimately benefit the long-term residents who have helped build and fight for these communities. In many instances, however, these families sell to the highest bidder in what often proves to be a short-sighted financial decision, where they then face great difficulty in purchasing a comparable property elsewhere and often end up squatting again in worse conditions once the money runs out. Attempts to place artificial restrictions on sales to mitigate these effects, such as setting a minimum time limit before selling a title or establishing criteria for the buyer to be “from the community” or “low income,” are difficult to implement. There are two cruel ironies here: it was precisely the lack of personal safety and the lack of security of tenure that gave favela residents the chance to build

80

Anthropological Perspectives

their homes and communities where they did; and the long-sought dream of land title had become largely irrelevant by the time the government began to deal with it.

Fluidity of Formal and Informal Boundaries All that is solid melts into air.14

It is too early to tell what will happen in the next chapter of this ongoing drama of rights, dignity, citizenship, and security that is being played out over real estate in the favela. If history is any guide, the most vulnerable will benefit the least, and the most powerful will prevail. But there is always hope that this time the configuration of political and economic forces may lead to a more just outcome. To conclude this chapter, I want to return to the question of formality and informality. During the process of conducting this research on real estate, I saw repeatedly how easily the authorities can turn a blind eye to “irregularities” in the formal neighborhoods and how punitive they can become in the informal ones. But I also saw an intriguing process of crossover, with the formalization of informal transactions and the informalization of the formal. Whereas real estate market practices in the formal and informal city may seem diametrically opposed, the more you learn, the more the distinctions disappear. Neither the formal nor informal real estate markets could function without a strong dose of Brazilian jeitinho, which is the knack of finding ways to get around bureaucratic red tape. What seems to have allowed the real estate markets in favelas to function as if the residents were owners is the improbability of any administration demolishing a favela when over 22  percent of the city’s electorate lives in informal settlements (even more if you count the neglected public housing projects and the clandestine subdivisions). Moreover, the scope of investment in the UPPs and the PAC demonstrate the commitment of the city, state, and national governments to the continued existence, if not full integration, of the favelas. This has given the favela residents, particularly those in large visible communities, de facto land tenure regardless of legality. When real estate transactions are certified by the signature of the president of the RAs, who may be a well-known and well-armed drug lord, there is a kind of perverse crossover between formal and informal. The practice of

Informal Real Estate in Rio’s Favelas

81

signature confi rmation of RA presidents at the Cartório de Registro de Títulos e Documentos confers an added degree of legitimacy to favela sales contracts, although their legality is still an unresolved question. Alex Ferreira Magalhães, a legal scholar at the Federal University of Rio de Janeiro, has argued that the RA sales documents are, in fact, legal and even more onerous than those in the formal market due to their requirement of two signed witnesses, something no longer demanded in formal market sales since 2003 (Magalhães 2010). Magalhães bases his argument on the legal concept, instituted into law in 2001, of Concession of Special Use for Housing (CUEM), which permits ownership of improvements on government-owned land. He also points to divorce proceedings that have used sales documents from RAs as proof of ownership and to the fact that the city government itself uses RA documents as evidence of ownership in its programs of regularization of home titles. Still, CUEM only stipulates ownership of the dwellings, not the land. While this gives residents the right to sell their homes, possession of the land is still maintained by the government. In any case, CUEM only applies to lowincome residents who do not have other housing options. It is not clear whether the concept can be applied to all informal sector residents and how it would treat a second house that was used for rental or other incomegenerating reasons. Furthermore, like the Brazilian Law of Adverse Possession guaranteeing squatters rights after a certain period of uninterrupted occupancy (usucapião), CUEM applies only to settlements on governmentowned land—with those on private land deemed illegal squatting. In the formal sector, the expectation is that ownership is unambiguous. But even here, there are gradations in degree of ownership and in the relationship of the seller to the property being sold. These include “possession” of the property, which may not imply legal title; “use rights” to the property, which likewise do not necessarily imply title; ownership with debt (such as a mortgage or other loan); and outright ownership with no debts, liens, or encumbrances. The old saying “possession is nine tenths of the law” may be even more applicable in the formal sector than in the informal sector. Just as property sales take place in the favelas without ownership title, property sales in the formal city sometimes take place without official documentation. For example, a property owner may build houses, multifamily dwellings, or small apartment buildings on his own land and sell them off the books. To do this legally, the seller would need a building permit showing conformity to occupancy standards and health and safety requirements;

82

Anthropological Perspectives

would need to show conformity with the zoning regulations of the area; and would need to register the new structure(s) and pay taxes and fees accordingly. Insofar as these requirements are not met, which is quite often the case, the properties and their sale are both illicit and illegal. But where there is demand and code enforcement is lax, real estate transactions are conducted among consenting parties, money is transferred, and occupation follows. It is clandestine occupation of a clandestine building hiding in plain sight in the formal city. As Luiz, a downtown real estate agent explained in response to my persistent efforts to understand how things work, “Tudo tem como resolver” (everything has a solution). His point is that nothing is impossible in Rio real estate. For every rule, exceptions can be made. There is always a jeitinho (knack; a way around) for everything, and everything has its price. “It all depends,” he said. In response to my question “Depends on what?” he replied, “That depends.”

CHAPTER 5

Tenure Regularization Programs in Favelas in Brazil Patricia Cezario Silva and Yvonne Mautner

Since the 1950s, Brazil’s informal settlements, known as favelas,1 have proliferated due to rapid industrialization and urbanization. From the 1950s through the 1970s, the population in favelas grew more quickly than the general urban population. At its peak in the 1980s, the population growth rate in favelas rose to 7.6 percent at a time when the overall rate was 1.89 percent (Taschner 2003: 32). As of the last Brazilian census (2010), 11.4 million people (or 7 percent of the total urban population) lived in favelas. Favelas fi lled the gap between the demand and supply of affordable housing in the formal market and were located primarily on public land. Policies toward favelas evolved from clearance programs in the 1950s and 1960s to a gradual recognition that for political, social, and economic reasons, they could not be eliminated. In the 1980s, as favelas began to be recognized as a permanent feature of Brazilian cities, the state undertook programs to provide basic infrastructure and, consequently, to “regularize” informal settlements located on public land by providing secure tenure. While upgrading interventions in Brazil have had some success, tenure regularization efforts have not been as effective. To date, only 8  percent of the favela households have titles (Fernandes 2011: 32). This chapter examines the impacts of regularizing settlements on public land designated as “common use” in the metropolitan area of São Paulo. It starts with a description of the legal framework that defines housing rights for low-income squatters and the different regulations that govern tenure regularization on private land versus public land. Next, it discusses trends in

84

Anthropological Perspectives

Brazilian urbanization that have led to the occupation of public land by favelas. The chapter then presents data collected in surveys conducted between 2005 and 2008 with residents before and after a regularization program implemented in two settlements in metropolitan São Paolo. The surveys seek to identify the beneficiaries of the regularization program, review its effects on the physical environment of the favela and quality of life of residents, and evaluate any weaknesses or unintended consequences of these programs, such as gentrification. Based on the survey findings, the chapter concludes that the program had mixed results depending on whether residents were homeowners or renters, and finds that there is thus far no evidence that gentrification has occurred. This chapter’s finding will be helpful in refining tenure regularization policies for informal settlements in the future.

Housing Rights and Tenure Regularization on Public Land: The Way It Works in Brazil The City Statute (2001), adopted after thirteen years of protracted debate, is the primary federal law that governs land access and equity in Brazilian cities. Supplementing the Federal Constitution of 1988 (Chapters 182 and 183), the City Statute regulates urban policy. It is meant to ensure democratic city management and to prioritize the “social function” of land (which is defined by how it is used) over its commercial value. Along with the adoption in 2001 of Provisional Measure (PM) 2220, which regulates tenure regularization programs on public land, the passage of the City Statute validated longstanding claims from a variety of stakeholders to expand access to land as a means of eliminating barriers to housing production. Erminia Maricato, former vice minister of cities, describes the coalition that advocated for these measures: “Citizen’s movements, professional bodies, academic institutions, trade unions, researchers, NGOs, parliamentary representatives, and progressive town mayors pursued a concept of this type for many years and saw it come to fruition in the face of adverse circumstances. The Statute seeks to bring together, in a single text, a series of key themes related to democratic government, urban justice and environmental equilibrium in cities. It also highlights the gravity of the urban question, ensuring that urban issues occupy a prominent position on the national political agenda of Brazil—now a predominantly urbanized country that was essentially rural until relatively recent times” (Maricato 2010: 5).

Tenure Regularization in Favelas in Brazil

85

The City Statute requires that municipalities with populations of twenty thousand or more produce master plans that define the “social function of land.” Th is requirement is meant to expand access to land, especially for social housing. Strong resistance on the part of private property owners has made implementation of the social function provision difficult, however. In 2003, in his first term, President Luiz Inácio Lula da Silva, the leader of the progressive Workers Party, put his support behind the statute. He created a Ministry of Cities to develop a national urban policy and, by 2005, mandated a national program on regularization allocating funds from the national budget for these programs. Brazil has different types of regularization programs depending on whether the favela in question occupies private or public land. These land ownership conditions influence the decision of whether to regularize a settlement or not. The design of any given land regularization program ultimately depends on several additional factors as well, including the legal instruments to be assessed, the capability of a local government to carry out the program, the time the process might take, and the financial resources required. On private land, regularizing informal occupation means transferring private property rights from the original landowners to the favela occupants, a process that can be fraught with tension among original owners, future owners, municipalities, and the judiciary system. According to the City Statute, low-income occupiers of private land living in an area smaller than 250 square meters for more than five years prior to 2001 have the right to a freehold title to that land, which can be claimed through a judicial process called “adverse possession.” However, the City Statute also allows the original landowners to repossess their property through court proceedings if it has been occupied for less than five years. Watchful landowners frequently take advantage of this provision. For public land regularization programs, which form the majority of tenure initiatives, the process is different. This process is governed by the City Statute and PM 2220; during the congressional debates on the statute, the section assuring tenure rights to occupiers of public land was eliminated but later reinstated as PM 2220. PM 2220 established that every low-income household occupying public land not larger than 250 square meters for more than five years prior to 2001 has the right to live on this land. If the occupied land does not fulfill the requirements for regularization—for example, if it is prone to landslides or flooding—a household has the right to another housing solution elsewhere, to be provided by the local government.

86

Anthropological Perspectives

Notably, these public land regularization programs observe the land classifications under the Brazilian Civil Code that distinguishes among three categories of public land: (1) public land for common use includes streets, squares, parks, and beaches, but excludes such private uses as housing; (2) public land for “special use” includes such designated uses as libraries, museums, and public administration in general; (3) “dominial” public land includes the disposable patrimony of the state, which can be sold or donated with no restrictions on use. While both local government and inhabitants claiming their housing right in court can initiate a regularization program, local governments are the most active. Having broad authority to carry out regularization programs, local governments tend to focus their programs on public land for common good, doing this for a couple of reasons: favelas tend to occupy large amounts of it, and recent Brazilian law offers relatively easy means for its regularization. In these programs, local governments issue legal documents called “grants for special use for housing purposes.” The grants give people the right to live on public land for common use but not own it. The land remains publicly owned, especially if the favela is on public land for common good that under Brazilian law, cannot be bought or sold. The grants can be given to a single household or collectively, and can be registered, transferred, and inherited. Under these arrangements, however, the recipients are not eligible for mortgages or other loans that use property as collateral. Regularization relies on the existence of registered titles of the land occupied by the favela, whether public or privately owned. Not every municipality maintains proper registries of their own land, especially parcels acquired through the process of subdivision of private land where the government mandates land set-asides for streets and other public uses.

Why Do Favelas Mainly Occupy Public Land? São Paulo has more than eleven million inhabitants and is the core of a metropolitan area of around twenty million people. Between 1950 and 1970, the São Paulo metro population had an annual growth rate of nearly 6 percent. The rate tapered off in the 1970s (declining to 5 percent), fell to under 2 percent after 1980, and today is about 1 percent (IBGE 1950, 1960, 1970, 1980, 1990, 2000, 2010). The high growth rate led to the rapid land subdivision and the creation of favelas.

Tenure Regularization in Favelas in Brazil

87

Figures 5.1 and 5.2. Favelas occupying public land for common use are shown in white in 1985 (left) and 2005 (right). In black are favelas placed on private land or land with other types of public ownership.

The geography of favela location is fraught with conflict and complexity. Overall, favelas tend to occupy public land for common use in peripheral locations (see Figures 5.1 and 5.2). One reason is that wealthy communities in more central areas that do not want low-income settlements as neighbors have pressured local government to neglect nearby favelas and eventually call for their removal. Furthermore, in the past, many questionable events—even arson—against favorably located favelas have served as the pretext for local

88

Anthropological Perspectives

government to clear the settlements. In the last decade, however, the City Statute has barred any removals when land is fulfi lling its social function. Favela occupation on public land seems to have a recurrent pattern throughout metro São Paulo. It follows a series of unplanned and unofficial actions by private landowners, the judiciary, the state police, and elected officials. The sequence is as follows: 1) private landowners make legal claims on squatter-occupied property; 2) the court decides in favor of the private owner; 3) the police evict the squatters; 4) elected officials provide new sites on public land for common use for the displaced families. Of note, when local government allocates public land for common use to housing, it forecloses the use of that land for recreation or other community uses. In cases where the local politicians do not intervene on behalf of the evicted, families are on their own to secure new housing. They resort to living with relatives, moving to another favela, finding a place to rent (from favela residents with extra space), or joining a social housing movement group. The voting power of social housing movement often influences the political decision to allocate public land.

The Impacts of Tenure Regularization on Public Land for Common Use in Osasco In 2005, the Ministry of Cities funded a regularization program in favelas on public land in Osasco, a city with a population of 600,000 that lies adjacent to São Paulo along its wealthier border. Occupation of Osasco’s favelas occurred according to the pattern described earlier, with the mayor having allowed families evicted from private land elsewhere in the city to settle the land. In 1985, Osasco had 100 favelas: 24 on private land and 76 on public common-use land, By 2005, the city had 158 favelas, with only 1 on private land, 144 on public land for common use, and 13 on public dominial land. The regularization program has reached 31 favelas, all on public land for common use (Cezario Spinazzola 2008: 59).

Who Were the Beneficiaries?

Preregularization (2005) and postregulation household surveys in two favelas whose combined population was 420 households revealed findings on beneficiaries. First, the areas experienced a decrease in the number of households

Tenure Regularization in Favelas in Brazil

89

(2 percent) and in population (8 percent). Second, some 15 percent of the households were newcomers. However, they bought their homes from residents who had quite random and ordinary reasons to move out of the settlement, for instance, marriage, inheritance, or moving to another region of the country to take care of elderly parents. Neither speculation nor gentrification appeared to be a motivation for their moving to the favelas. Third, incomes among the residents slightly improved. At the beginning of the program, 67 percent of the population had household incomes ranging from no income to up to three times the minimum wage.2 After regularization, the number dropped to 62 percent of the population. Notably, the zero-to-threetimes-minimum-wage income group is where 91 percent of the housing deficit is concentrated in Brazil (Fundação João Pinheiro 2011). Although the housing deficit in Brazil was reduced from 10 to 8.8 percent of all households between 2007 and 2011, in absolute terms, within the lower income group, the deficit has not changed and remains at 70 percent (Furtado, Lima Neto, and Krause 2010). That is a crucial issue in Brazilian housing policy. Most important, renters, who are few in number—less than 5 percent of the population—faced quite a different situation after regularization. While the program regulations provide housing rights to people who have been living in the favela for at least five years prior to 2001, either as squatters who built their own houses or as renters in self-built housing, this rule is not easy to apply. In fact, landlords usually evict their tenants in the early phases of regularization, even before official population counts start, placing their own family members in the vacated units in order to gain the right to occupy the units after regularization. In this way, they can retain rights to multiple units, renting some out after the conclusion of the program. Under Brazilian law, the courts uphold the eviction of renters. If they do avoid preregularization eviction, tenants are still a very fragile group. With improved ser vices and more secure tenure, landlords raise rents, pricing out lower-income renters.

What Were the Effects of Regularization on the Physical Arrangements in the Favela?

After regularization, the areas experienced significant physical changes (Figures 5.3 and 5.4). While the average lot size remained the same (82.97 square meters), the buildings were larger. Eighty-two percent of households renovated or enlarged their buildings for personal or commercial (rent) use.

90

Anthropological Perspectives

Figures 5.3 and 5.4. The same lot before land tenure regularization in 2006 (left) and after, in 2013 (right). Source: Photographs by author, 2006 and 2013.

Table 5.1. Population and Population Density at the Surveyed Settlements

2000 2010

Area (square meters)

Households

Population

Population Density (persons/hectare)

47,582.48 47,582.48

570 560

2,394 2,205

503.13 463.4

Source: Brazilian Institute of Geography and Statistics - IBGE, Census 2000 and 2010.

These enlargements, created on top of existing structures, typically accommodated new households. While the individual units might be smaller in square meters than the previous average units, they have fewer inhabitants per household.3 The outcome for the community was increased building density (Table 5.1). Another example illustrates an aspirational goal that the program did not realize. In the early occupation of the subject settlement, as shown in Figure 5.5

Tenure Regularization in Favelas in Brazil

91

Figures 5.5 and 5.6. Actual occupation of public land for common use in 1977 (left) and 2006 (right). Source: Municipality of Osasco, 2006, and Google Earth. Elaborated by the author.

dated 1977, construction respected existing topography and the natural environment. A stream divided the area longitudinally. In 1985, as seen in Figure 5.6, an infrastructure-upgrading project channeled and paved over the stream and funneled untreated wastewater into the channel that feeds into a nearby river. As part of the regularization program, officials mapped a “permanent protection area,” a fifteen-meter-wide strip along the paved-over stream that should be clear of all construction.4 In fact, the houses remain where they have been built, even if the strip should have been cleared up during

92

Anthropological Perspectives

the regularization process. This outcome could be characterized as an illegal aspect of the regularization process itself, but after more than five years since the conclusion of the regularization process, no one has legally questioned it.

What Were the Outcomes of Regularization? The greatest challenge of Brazilian housing policy is to develop programs that accommodate households whose incomes range from zero to three times the minimum wage. Regularization processes address this population, but they deal with improving housing conditions for this group, not with increasing housing supply. The majority of Brazilian land regularization programs deal with the titling aspect of regularization of public land giving occupation not ownership rights. Thus, most of the tenure regularization programs in Brazil do not result in the establishment of new private property in the hands of former squatters. That is the fundamental reason why De Soto’s theory of Latin American cities put “in motion” by land and housing legalization and later use as collateral for loans does not apply to the Brazilian case of land tenure regularization in favelas (De Soto 1986). During a regularization process on public land, tenants are the most vulnerable group. Since the percentage of renters was less than 5 percent throughout the whole regularization process, it is possible that tenants may have been evicted preceding or early in the regularization process. Tenants may be evicted to make room for another member of the building owner’s family. Even if not evicted by force, they may be affected by higher rents and leave the area. While 15 percent of the households living in the settlement were not there before the regularization process, their motivations for moving in and out of the settlement were not related to an increase in the price of their houses. Based on these facts, we can conclude that gentrification does not apply to the studied favelas. Finally, in the studied settlements, the residents have a very strong sense of community, with many families having lived there since the area was first occupied (some of them had been evicted as a group from private land more than thirty years ago). They have gone through difficult moments of eviction from a former occupation, finding and claiming new land, being given land by the local government where it is illegal to live, and going through a regularization of tenure process. When asked about what has changed in the area

Tenure Regularization in Favelas in Brazil

93

after regularization, more than 60 percent of the interviewed people say the regularization project’s major achievement was something very subjective: the improvement of the ambience of the settlement. By choosing to address consolidated settlements primarily using the juridical tool of regularization rather than focusing on infrastructure or environmental works, the common use public land regularization program perpetuated very serious environmental, water, and sanitation problems. First, the site in question is an area originally designated for common use. The city as a whole and its population have in fact lost an important environmental and leisure asset in order to ensure housing for a part of its population. The regularization process has reaffi rmed the initial loss from the previous thirty years, when public land of common use was first occupied. The local government did not formulate any plan to “give back” to the city a part of this lost public area for leisure. Second, the water stream that passes through the area has not been addressed and remains under streets and even under a few houses. By officially transforming this area into housing, the municipality had the opportunity to address the environmental and sanitation issue of the channeled natural water stream that has been contaminated by sewage. However, in focusing solely on the juridical aspect, it failed to do so. The municipality of Osasco compromised when it designed the land tenure regularization program as an isolated policy. By failing to address the precarious infrastructure and by disregarding the need to replace at least part of the land for common use that had been lost, the city missed a major opportunity to improve citywide living conditions.

CHAPTER 6

Property Markets Without Property Rights: Dharavi’s Informal Real Estate Market Shahana Chattaraj

On a summer afternoon in Dharavi, Mumbai’s world-famous slum, a property dispute unfolded at a realtor’s “office”—four plastic chairs on a concrete stoop overlooking the slum’s main thoroughfare.1 A young man arrived with a thick wad of banknotes in the back pocket of his jeans—Rs 50,000 (US$812), the remainder of his rental deposit. He was Rs 10,000 short, but he asked the broker to talk to the seth, or landlord, on his behalf. Balaji, the broker, shook his head. “It’s not that you are short of cash, but you were supposed to have got the money together this last week, on August 1st. . . . I’ve been trying to call you, but you disappeared. The seth is very upset; he does not want to rent to you.”2 The young man pleaded that it had taken him a few days to arrange the money. The property in question was intended to house his small-scale workshop, which made “local,” or nonbranded, jeans. Dharavi is an informal industrial hub, full of large and small factories and workshops, manufacturing recycled plastic goods, clothing, food products, leather goods, medical sutures, and machine parts. Its annual industrial output is estimated to be between $600 million and $1.5 billion (Brugmann 2010). The lease on the young man’s current factory space, also in Dharavi, was ending, and he needed more space. The broker talked to the seth on his mobile phone, but the seth was unyielding. “Well, then I want the rest of my deposit back,” said the young man. Again, Balaji shook his head. “That was commitment money; you’ll have to take a loss on that. It was to

Dharavi’s Informal Real Estate Market

95

show you were serious, but then you disappeared, and you are nearly a week late.” “It’s not the money,” the young man said. “I need a space immediately. . . . Work is going on; it hasn’t stopped, and I have orders. Will he take the rest of the money, or do I have to find another space now? Tell me where to find him; I’ll go talk to him.” The factory space, Balaji revealed, was still available. The broker sent him to a neighborhood teashop where the seth was likely to be found, advising him not to make a fuss but to admit his mistake. The young man took off, the large bundle of cash clearly visible in his back pocket. “Every transaction is in cash here,” said Balaji. “People are always walking around with cash like that, but the money doesn’t get stolen.” It was, according to Balaji, a typical day’s work. The seth was one of the slum’s large property owners and owned several factories and workshops. The young man was one of Dharavi’s so-called slumdog entrepreneurs, celebrated by Edward Glaeser and the Economist (Glaeser 2009; Economist 2007). His business establishment was unlicensed. The majority of slum households and businesses rent their premises, and 75 percent of Balaji’s business involved rental transactions. Property prices in Dharavi, spurred by the Maharashtra Government’s Dharavi Redevelopment Project (DRP),3 were reportedly booming, even as “formal” property markets slumped during India’s continuing downturn (Bradsher and Bagri 2013). Mumbai’s tabloids and fi nancial papers were awash in stories about the slum’s real estate “gold rush,” reporting on a shanty that sold for “Rs One Crore,” approximately US$165,000 at today’s conversion rates. Property sales, according to Balaji, were primarily cash transactions. “Ninety percent of sales are in cash. Maybe 10 percent get bank loans, but that is only when there is clear title, all the papers are available, the plans have been passed.” The price of an “average” slum shack, said Balaji, pointing toward a two-story, two-room structure just off the main road, was Rs 15 to 20 lakh (US$25,000 to 32,000). “It costs more per square foot if it’s near the main road, depending on the location, but the rate is the same, whether properties have a clear title or not.”4 In Dharavi, transactions involving substantial sums of money occur in the absence of clear and secure property rights, legal titles and property deeds, a system of property registration, bank fi nancing through mortgages, or legal redressal systems. While prices in Dharavi, a centrally

96

Anthropological Perspectives

located and established industrial slum, are significantly higher than in most slums, informal settlements across the city are characterized by similar market mechanisms of renting, buying, and selling. Over half (55  percent) of Mumbai’s nearly twelve million residents live in slums (Municipal Corporation of Greater Mumbai 2010), and obtain housing primarily through “informal” housing markets rather than the communityorganized land invasions and self-building popularly associated with slum settlements. “Informal” markets extend beyond Mumbai’s slums. The central Planning Commission describes the real estate sector in India (housing, real estate ser vices, and construction) as being “largely unorganised”5 (Government of India 2002: 830). In 2004, as per a national report, only 28,000 of more than three million construction entities operating in India were registered. Housing, which accounts for 82 percent of the real estate market, is particularly “fragmented,” with the informal sector producing 75 percent of India’s housing (National Skill Development Corporation 2009:18). Much of the real estate sector in India, although it accounts for 9 to 10 percent of gross domestic product (Government of India 2002: 830), exists outside formal institutional and regulatory systems. In other words, much of the built environment in Indian cities is produced as a result of informal market transactions taking place outside of the official, institutions governing land use and development. For most households, housing is the single largest consumption and investment good, and households and businesses often make investments in the absence of legal title deeds, land registration documents, planning and development permits, in a gray space where the legal value of a contract is uncertain. Institutional economists Acemoglu and Johnson (2005) argue that “contracting institutions,” which govern transactions between individuals, as opposed to “property rights institutions,” which protect individual property from state expropriation, do not affect economic development or investment.6 They suggest that individuals develop “informal arrangements” (984) to counteract “bad” (or inadequate) legal rules, relying on customary norms or disinterested neighbors to resolve disputes. In Mumbai, a city of sixteen million “strangers,” these informal market transactions are clearly not governed by “traditional” norms, kinship structures, or neighborly mediation. What then is the nature of the “informal arrangements” that govern these markets?

Dharavi’s Informal Real Estate Market

97

The rest of this chapter examines how these informal arrangements work in Mumbai, drawing on ethnographic research and semistructured interviews conducted in Dharavi by the author in August 2013.

A Legal Gray Space: Land Tenure in Dharavi Dharavi, home to over sixty thousand people,7 is a diverse, bustling industrial slum described by the Economist (2007) as “thriving in hardship.” Established on colonial Bombay’s swampy outskirts by local fisherfolk and Gujarati migrants, Dharavi today is located at the geographical center of Greater Mumbai, adjacent to the city’s new central business district, the Bandra-Kurla complex. A cluster of villagelike settlements in the early twentieth century, Dharavi grew exponentially in the decades following India’s independence. Driven by migration from India’s southern states into Bombay in the 1960s and 1970s, it became the dense, vast slum of today. High migration rates during this period intersected with state policies designed to “decongest” Bombay, and deconcentrate industrial development from the city to Maharashtra’s “backward” regions. Aiming to discourage migration, the state was authorized by law to clear Bombay’s growing slums under the Slum Areas (Clearance and Improvement) Act of 1956. It was also required to rehouse slum dwellers in public housing but did little in this regard—state-provided, low-cost housing was seen as an invitation to migrants. In this context, Dharavi and other slums grew not as unorganized land invasions by migrant families but were established and controlled by politically linked slumlords, often connected to organized crime groups, who were able to gain access to state-owned land and protect settlements from slum clearance programs (Weinstein 2008; Zaidi 2012). Describing one of Dharavi’s powerful slumlords and mafia dons, Zaidi writes, “The dawn of Varda’s power came when his men could get anyone a ration card, illegal electricity and water supply and make them a Bombay citizen faster than the local administration” (18). Slumlords, local power brokers, and “big men” formed extensive connections with local politicians, municipal bureaucrats, and community networks, organizing votes in return for urban ser vices and mediating access to state resources and rights of urban citizenship (Appadurai 2001; Chattaraj 2012; Hansen 2001; Weinstein 2008).

98

Anthropological Perspectives

Many of the six-hundred-odd acres of land on which Dharavi sits are state owned. The largest landowner is the Brihanmumbai (Greater Mumbai) Municipal Corporation (BMC), which owns 59 percent of the land. The Maharashtra Housing Development Authority owns 17 percent, and the Central Government Railways 4 percent (Mukesh Mehta Consultants 2010). The remaining portion of Dharavi land is privately owned, including “Koliwada,” a village inhabited by the region’s original Koli fishing communities, who have legal land ownership rights. In Kumbharwada, where the Kumhar potter community from Gujarat established Dharavi’s oldest migrant settlement, households hold long-term leasehold tenancy rights under the Vacant Lands Act (1930). The leases allowed residents to establish brick kilns and carry out pottery-related activities (Mahajan 2009). While some members of the community still practice pottery, most of the land is now occupied by residential and commercial properties. As one of Mumbai’s older, more established slums, Dharavi is socioeconomically and ethnically diverse. Sizeable numbers of residents have the markers of middle-class-ness, including professional occupations and college educations. Dharavi is highly socially and politically orga nized, and has a long history of interaction with the municipal and state government. In the 1970s and 1980s, neighborhood-based “chawl committees” worked with the police to control the illegal liquor distilleries that proliferated in the slum when prohibition laws were in force. Cooperative housing associations were formed to implement the 1985 Prime Minister’s Grant project, which upgraded basic infrastructure and build some resettlement housing (Chatterji 2005; Patel and Arputham 2008). Dharavi has secured public ser vices such as water and electricity and some improvements in sanitation through various state projects and programs (Chatterji 2005). Under the Slum Rehabilitation Scheme, 8 launched in the mid-1990s, scattered high-rises emerged in Dharavi, built in a partnership between slum dwellers’ cooperatives and private developers (Mukhija 2003). Despite these improvements, Dharavi continues to be plagued by poor sanitation, inadequate ser vices, and squalid living conditions. In 2004, the Maharashtra Government approved the DRP, spurred by the efforts of Mukesh Mehta, an architect and “place entrepreneur” (Logan and Molotch  1987). Mehta conceived an ambitious plan to transform Dharavi into a “world-class” commercial center, befitting Mumbai’s economic rise and global aspirations. Appointed special consultant to the project, he envisioned that Dharavi would be redeveloped by leading international design

Dharavi’s Informal Real Estate Market

99

and development firms through a competitive bidding process. The DRP, he argued, would generate sizeable public revenue and dramatically improve the living conditions of Dharavi’s residents, who would get new housing along with public ser vices and amenities. In Mehta’s master plan, all the slum’s original households would be housed in tower blocks on a small portion of the redeveloped site, while the rest of Dharavi would be developed as office and commercial space, luxury housing, and cultural and educational amenities. The DRP was opposed by residents, local businesses, political leaders, and experts. In 2009, a state-appointed expert committee described the project as a “sophisticated land grab.”9 A decade after approval, Dharavi’s redevelopment project remains unrealized. Despite opposition from the community, the project “inches ahead” and is now slated to proceed in a scaled-down, phased form (Ruparel 2013). The prospect of redevelopment has spurred rumors of “outsiders” buying up Dharavi properties in order to acquire banks of “free” resettlement housing. Since only “legitimate” slum households that can prove residence in Dharavi before the DRP’s approval are eligible for resettlement, such transactions are necessarily benami (nameless), a term used to describe property transactions made under the name of a third party acting on behalf of the principal owner.10 It is thus difficult to assess the facts behind the speculation, but local realtors like Balaji are skeptical of rumors about an influx of outside buyers in a property “gold rush,” primarily because they remain skeptical that the DRP will actually be implemented. Industrial slums like Dharavi provide the primary source of housing for Mumbai’s informal migrant workforce, the majority of whom hail from India’s poorer northern states. As formal industry declined in Mumbai (Municipal Corporation of Greater Mumbai 2010), rental tenements for factory workers, known as chawls, were no longer built, and existing chawls became candidates for redevelopment.11 Dharavi’s informal industrial workers live within their workshops or in crowded one-room rental tenements, as the unregulated slum environment enables enterprises to violate factory and housing regulations. Employers can thus pay informal workers in Dharavi lower wages than they would under “formal” employment conditions by minimizing housing and transportation expenses. The new migrant workers resemble the “floating” population in Chinese cities, uncounted and invisible in the official estimates of Dharavi’s population, ineligible for public projects and programs and for resettlement housing if the slum is redeveloped. Their housing

100

Anthropological Perspectives

conditions, five or more to a small room that lacks light and ventilation, are several degrees worse than that of more established Dharavi households.

Tenure Systems and Informal Markets in Dharavi Dharavi overall is recognized by state authorities as a “legal” slum, in contrast with more recently occupied informal settlements, due to its longestablished communities and its history of state interventions. It has been officially “notified,” a status that protects residents from arbitrary evictions and obliges the state to undertake improvements and provide some basic ser vices. However, most of the households in Dharavi inhabit a legal gray area. The question of who owns a piece of land or a property, and what rights they have over it, is often legally ambiguous. According to Sharad Mahajan, executive director of Mashaal, a housing nongovernmental organization (NGO) that conducted detailed surveys of a section of Dharavi households for the DRP, legal title is a “piece of paper no one was worried about” and “possession” of a property is equivalent to ownership (Mahajan 2009: 2). Residents with long-term leasehold rights frequently violated the terms of their lease by selling or subdividing the property, using it for prohibited or nonconforming industrial activity, or building additional floors for rental purposes. Seventy-four percent of the structures surveyed had more than one story, but Mahajan said that the state housing authority refused to “recognize” the upper floors of buildings, most of which are used as rental housing.12 Mahajan collected copies of various forms of documentary evidence households produced to establish proof of their residence in Dharavi in order to qualify for resettlement housing. The documentary evidence included property transfer agreements, rental leases, electricity bills, property tax or fee receipts, building plan approvals, utility bills, and state-issued “ration” cards. Slum residents in Mumbai keep such forms of paperwork carefully, as they are important means of becoming “visible to the state” and increasing legitimacy (Appadurai 2001; Chatterji 2005). Th ree-quarters of slum homes in Dharavi occupy between 54 and 161 square feet (Mahajan 2009), while factory and workshop spaces are significantly larger, averaging 400 square feet. Salimbhai, a Kumhar businessman and local leader, is one of the larger landlords in Dharavi and claims to own

Dharavi’s Informal Real Estate Market

101

11,000 to 15,000 square feet of built area. He also owns property and businesses outside the slum, including a shop in a prime area of South Bombay. The Kumhars, who were the original settlers of Dharavi, consider themselves “owners” of their land and structures. Officially, the Kumhar landlords are tenants of the state, paying nominal rates set decades earlier. Under the terms of their vacant land tenure leases, they are not allowed to sell or release the land or build rental tenements, although many have done so. Some of their leases have consequently been revoked (Mahajan 2009; Risbud 2003). Their tenants or “subtenants” legally are tenants of municipality, under the same terms (Yuva 1999). Several other legal forms of land tenure in Dharavi exist. They include cooperative leases for registered housing societies, formed under the 1985 Prime Minister’s Grant Project, which “formalized” most of the homes in Dharavi, although the state continues to own the land. Parcels of land in Dharavi are also legally owned by religious and social groups, such as Islamic “wakf boards” or the Prajapati Sahakari Utpadak Mandal, the registered welfare society for the Kumhar community, established in 1951; these are intended for public amenities, such as dispensaries or community halls. Some of these lands have been illegally sold and developed for commercial and rental purposes. They may be illegal and lack property deeds, but they often have other official papers, such as building permits and tax receipts. “Plans get passed. You go to the BMC, to one department and then another, give cash, get an okay.” (Th is process sounds little different from getting plans approved for legal housing.) The rental market in slums and informal settlements, which provides housing for the majority of Mumbai’s lower-income and poor residents, particularly new migrants, is largely “unrecognized” by state authorities. The official “notification” of a slum acknowledges the rights of residents to “dwell,” the assumption is, in self-built shelters on public land, but not to develop housing or buy and sell or rent homes. According to a senior state official, the state may tolerate on humane grounds poor people occupying public land for shelter, but it should not tolerate profit-seeking activities as a result of illegal land occupation. The official said, “It’s one thing to build a house illegally to live in, but if you start earning money from it also, that’s not acceptable!” As a result, slum residents displaced by state projects are not compensated for the loss of rental income.13 Nor does the state take into account, in the design of the DRP, the loss of rental housing for the poor that will occur when Dharavi is redeveloped.

102

Anthropological Perspectives

Under the DRP, tenants who can prove residence in a particular structure before the legally mandated “cut-off ” date are entitled to receive the same rehabilitation housing as their landlords when displaced. For the Dharavi project, the cut-off date is 2004, the year the DRP was approved. The state does not officially recognize the tenant-landlord relationship in slum settlements: both are equally occupiers of public land and thus entitled to the same benefits under the DRP. Absentee landowners not living on the premises or slumlords are not entitled to rehabilitation housing, and each household is entitled to only one flat. Rental agreements in Dharavi, prepared on Rs 100 stamp paper, are eleven-month leases similar to those in the “formal” market, although these may not be justiciable in a court of law. Eleven-month agreements, common in Mumbai, imply that even long-term slum residents may move frequently, if landlords fail to renew their leases, if they raise rents (there is no rent control in Dharavi), or if they move for other reasons. Ganesh, a tour guide in his thirties, moved to Dharavi with his family when he was eleven. He had since married and moved with his wife and child to “formal” housing in the far outskirts, but his parents remained in Dharavi as renters, moving several times within the slum, as family and financial situations changed. Ganesh’s family, despite their decades-long residence in Dharavi, will find it difficult to establish eligibility for resettlement housing, as they must provide evidence that they were living in their current home before project approval. Although the DRP is intended to protect the interests of tenants and subtenants, the short-term lease arrangements prevalent in the slum, and the fact that slum households move frequently, means that many longtime Dharavi residents will be ineligible for resettlement (Lewis 2011). Moreover, while the DRP, in principle, rehouses all of Dharavi’s original households, the project’s failure to take into account the complexity of the informal housing market means that it will destroy far more low-income housing than it will replace through resettlement housing. In 2013, a one-room home in Dharavi rented for an average of US$100 per month. Compared with the “formal” rental market, renters in Dharavi, like the young jeans manufacturer portrayed in the beginning of this chapter, paid high “commitment” fees and deposits up front, in cash, for relatively lower monthly rents. This may be explained by the fact that the majority of Dharavi residents are informally employed and might not have regular monthly salaries. To secure the high deposit payments, prospective tenants rely on various sources, including friends and family and informal credit

Dharavi’s Informal Real Estate Market

103

providers. Some may even take out loans from formal banks, usually “cash for gold” loans on pawned jewelry. “Loans for gold” were formerly an informal practice, provided through local gold and jewelry shops, but are now offered by large banking institutions such as the State Bank of India. Newcomers and recent migrants need to have someone vouch for them in order to obtain housing in Dharavi. Property transactions in Dharavi occur in a “gray space,” where the line between what is “legal” and “illegal” appears to be irrelevant to participants. Although the form of the transactions—the leases and property transfer agreements—mimic that of the formal system, they are not likely to stand up in courts. “Because of the tangle of legislation governing the management and development of urban land, as well as a long history of lax enforcement of existing regulations concerning slum areas, very few tenants or landlords had a clear idea of their rights and obligations to each other and the Municipality,” reports Yuva (1999: iv), a housing rights NGO. Research on informal settlements around the world, as in Dharavi, indicates a range of tenure status, from freehold and leasehold titles, tenancy rights and communal rights, to de facto and extralegal measures of tenure security, rather than a clear line between legal and illegal (Payne 2004; Durand-Lasserve and Royston 2002). Ownership of land parcels is rarely clear, official land records are spotty and unreliable. In such a situation, formalization through property titling is legally and administratively taxing. In the absence of formalization or legalization through legal titling, “real security to the poor is in the form of protection by local slumlords, politicians who help them in their needs and provide basic ser vices like water, latrine, pathways and streetlight, police departments” (Mahajan 2009: 2). While such practices are typically dismissed by elites as vote-bank politics or clientalism, they can also be understood as a means toward gradual political, economic, and even legal inclusion for the informal poor. In India, urban poor households gain legitimacy, space, public services, and gradual improvements in their quality of life primarily through political channels (Chattaraj 2012; Chatterji 2005; Hansen 2001). Political networks increase tenure security in slum areas by providing protection, not from state expropriation but from state “reappropriation” of public land. In India’s democratic polity, politically secured rights may gain legal status, for example, through regularization programs (Chattaraj 2012). Balaji, the Dharavi broker, argues it is not just politics but law—the Indian Constitution and Supreme Court rulings—that prohibit the state from

104

Anthropological Perspectives

evicting or demolishing the slum. “Forty years ago, there was nothing here, and people built it up and built homes on it. They have lived here thirty to forty years, and, according to the Constitution, they have rights to the land, legal rights. If the state tries to evict them, they can go to the courts, and they do go, the Bandra Court right here, or the High Court.” Balaji is referring to the principle of “adverse possession” of property, enshrined in Indian jurisprudence (Sharma 2012). Households in older and more established settlements like Dharavi thus enjoy de jure as well as de facto property rights. Newer slums rely on political participation and intervention to gain de facto tenure security.14 This system of de facto tenure security, where the threat of state reappropriation of encroached public land or enforcement of laws and regulations is low—and political channels offer the prospect of access to public ser vices and gradual regularization—provides the context within which real estate markets in informal settlements operate. While property transactions and procedures in Dharavi mimic those of the formal system, contracts are enforced not through the legal system but through informal political and community networks. Balaji, the broker portrayed in the beginning of this chapter, in this system is not just a broker in the conventional sense of linking property seekers and sellers. He is also someone who gathers and shares information, brokers compromises during disputes, keeps abreast of the complex legal environment within which property transactions occur, and knows how to obtain the “papers,” legally enforceable or not, for a sale. He is embedded in a network of local brokers, fi xers, community leaders, party workers, elected state representatives, municipal councilors, police, and municipal officials who play a key role in the orga nization of informal economic activities in Dharavi, as in most other informal spaces in Mumbai (Hansen 2001; Chattaraj 2012). These networks provide a framework within which information is shared, disputes are settled, and access to public resources is negotiated outside the formal institutional and legal system. Says Mahajan, “People take commercial decisions, such as making large investments in property without clear title and so on, based on confidence in the system, or rather, confidence in the lack of a system. Here, people have confidence in the ‘non-system,’ which is not very transparent and not what it should be according to the legal system.”15 In this, Dharavi’s slum market is not so different from property transactions in more “formal”-seeming settings, for example middle-class or luxury housing developments built on illegally subdivided rural, public, or disputed

Dharavi’s Informal Real Estate Market

105

lands.16 These developments inhabit a space where the line between legal and illegal is blurry, determined through political bargaining and quasilegal adjudication (Donthi 2014). “Power of attorney” is used in property transfer in instances where land titles are not clear or official licenses are lacking, or merely to avoid stamp duties and taxes. Through political lobbying, “informal” developments get “regularized” and formalized.17 Unlike slums, “informal” housing developments inhabited by the city’s wealthy and middle classes are protected from state sanction not because of their cleaner legal status but because of the socioeconomic class and upper-level political connections of their residents.18 Informality, defined as being “unregulated by the institutions of society in a legal and social environment where similar activities are regulated” (Portes, Castells, and Benton 1989: 12), imbues much of the built environment in Indian cities, extending well beyond the spaces categorized as slums or squatter settlements. The “nonsystem” described by Mahajan and Balaji can be understood, in fact, as an informal institutional system in that it provides a stable and shared understanding of “rules and procedures that structure social interaction and constrain and enable actors behavior.” It is informal, because the rules are “created, communicated and enforced” outside of official channels (Helmke and Levitsky 2004: 725), but is not based on “traditional” norms and kinship structures, the default category assigned to nonformal institutional systems in developing countries. Instead, it is defined by, interacts with, and in turn shapes the workings of Mumbai’s formal institutions. The Mumbai Transformation Support Unit, a government think tank, notes in a working paper on the political economy of land in Mumbai that the “enforcement of the extant rules and regulation when weak leads to strengthening of the informal interactions with an institutionalization of an interaction protocol that is perchance stronger than the formal system.”19

Conclusion This chapter explores a pervasive, important, yet understudied phenomenon, the operation of “informal” housing markets in Mumbai. In Dharavi, a thriving real estate market exists in the absence of secure and legally defi ned property rights, reflecting an urban political economy where informal as well formal institutions shape markets. These trends in Dharavi appear to

106

Anthropological Perspectives

contradict De Soto’s (2000) argument that residents of informal settlements, lacking legal titles to their property, are unable to access finance in order to participate in property markets or grow their small businesses. In Mumbai, given the scale and scope of the informal economy, informal processes and institutions, widely assumed to be residual or marginal, are central to urban development, interacting in complex, constitutive ways with formal systems and institutions. Perlman, in Chapter 4, finds similar patterns in her study of real estate markets in Rio’s favelas. In both cities, the scale of informality reflects and shapes the urban political economy and institutional context, creating urban development processes that differ substantially from the formally regulated and institutionalized property markets in Western cities and also from state-controlled or “traditional” systems of old. More comparative and interdisciplinary research is needed in order to flesh out, conceptualize, map, and assess the interlinked workings of informal and formal property markets and development processes, and to develop policies cognizant of and appropriate for the social and political contexts of developing cities. The crucial and as yet unresolved question becomes how and to what end the state should regulate these markets to ensure the delivery of essential public ser vices and infrastructure and improved living standards for the majority of urban residents.

CHAPTER 7

Periurban Land Markets in the Bangalore Region Sai Balakrishnan

The past ten years in India have been a decade of land wars. In early 2008, the small village of Singur in the state of West Bengal, located along the Kolkata-Delhi national highway, grabbed international media attention as the site of one of India’s most contentious and violent struggles over land acquisitions. The protests by the Singur farmers were against the forced acquisition of agricultural lands by the state government for the setting up of a small-car manufacturing factory by Tata Motors, one of India’s largest corporations. By the end of 2008, Tata Motors decided to pull out of West Bengal, and the ruling state government, the Communist Party of India (Marxist), lost its office for the first time in thirty years in the subsequent state elections. In 2011, land acquisition for the 160-kilometer Yamuna Expressway, connecting the cities of Delhi and Agra, unleashed a wave of violence, with protesting farmers torching government vehicles in their rage against the acquisition and the state government deploying police forces to quell the protesters. The farmer-police clash resulted in the death of two farmers and two policemen. Over the past ten years, the Bangalore-Mysore Infrastructure Corridor, connecting the South Indian cities of Bangalore and Mysore, has been mired in protests and litigation against the compulsory acquisition of land by the state government for highway development. All of these conflicts are taking place not within cities but in periurban areas just outside cities.1 These land conflicts are rooted in a politics of allocating surplus land values. The conversion of agricultural land to urban land

108

Anthropological Perspectives

results in dramatic increases in land values. This new restructuring of periurban land markets interacts in complex ways with old caste-based forms of agrarian control. The outcome is that the agrarian landowners—marginalized groups whose holdings were low-value agrarian land—now possess high-value assets in an urbanizing economy. These land-based changes are creating new conditions of informal land and labor relations as illustrated by the following case-study land transactions in Bidadi, a periurban district located at the urban periphery of Bangalore. This chapter explores these new dynamics in three parts. The first sets the context of liberalizing urbanizing real estate markets in India, and introduces the concept of the surplus value of land, or land rents, around which the rest of the chapter is organized. The second is the case study of land development in periurban Bidadi. Data for the case study comes from nine months of fieldwork from December 2010 to May 2011 and from June to August 2013.2 The third concludes that India’s new periurban land markets can be analyzed as a distributive conflict over the allocation of land rents. Such an analysis opens up a new mode of understanding and intervening in these periurban land markets.

New Context of Land Scarcity and Rents India’s land markets have seen a flurry of activity in the past two decades: public and private actors are frenetically converting agricultural land to nonagricultural uses, inner-city informal settlements to high-rise developments, fallow land to new towns and mixed-use enclaves. The advocates of change attribute the rapid restructuring of the land markets as a supply response to the scarcity of urban land that arises from an exponential growth of India’s urban population. They estimate that the projected increase in India’s urban population from 30 million in 2008 to 590 million in 2030 will require 700 to 800 million square meters of new residential and commercial space, roughly equivalent to a new Chicago being built every year (McKinsey Global Institute 2010). Some scholars add that with the liberalization of the economy, capital is now no longer scarce. There is a greater availability of capital for the nonagricultural sector, but urban land is now scarce because the state has not created the conditions conducive for farmers to sell their land. These scholars argue that the role of the state is to create conditions for the fair transfer of land from farmers to industrialists (Sathe 2011).

Periurban Land Markets in Bangalore

109

In contrast, those from the critical left argue that no urgent demand for urban land exists. Instead, they liken the current increase in land prices to earlier commodity “rushes” like the gold rush. They posit that viewing land as a “valuable, limited/scarce, commodity poised to rise in value,” encourages speculation, not any real demand for productive use of land, thus fueling the increased prices and transactions (Li 2012: 1). This chapter offers an alternative explanation to the contemporary land conflicts in rapidly urbanizing countries like India. It argues that at the core of these land conflicts are changes in the forms of land rent. Land rent is most simply defined as the surplus value accruing to land from its locational advantages. A number of scholars have used the concept of land rent to explain informal housing. Burgess (1978) and Peattie (1979) have argued that there is nothing natural about the housing problem. Both food and clothing, for instance, are basic needs, but they have never attracted the kind of policy attention that housing has. The housing problem, to them, is socially constructed and carried forward by different fractions of capital—industrial, landed, fi nancial—each of which has its own vested, often confl icting interests, on the rental profits to be derived from institutionalized housing solutions such as sites-and-services and public housing. In the words of Peattie, the housing problem exists because it “incorporates competing interests around rent—and who gets it” (Peattie 1979: 1018). More recently, Benjamin (2008) has argued that informal settlements, with their multiple forms of de facto tenure, are subversive institutions that help poor groups appropriate real estate surpluses vis-à-vis global and large-scale land developers. In the context of the United States, Smith (1987) popu larized the idea of the “rent gap” as a way of explaining gentrification processes. He argued that the redevelopment of inner-city low-income neighborhoods into swanky high-end developments are efforts to close “the gap between the actual capitalized ground rent (land value) of a plot of land given its present use and the potential ground rent that might be gleaned under a ‘higher and best use’ ” (1987). All of these studies so far have focused on inner-city informal housing and land markets. The thrust of this chapter is that a different dynamic of land rents underpins periurban land markets. The distributional implications of these periurban land rents have received little attention in studies of informal housing. The periurban land rent dynamic is as follows. In an agrarian economy, the fertility and location of land determine its rent. The most valuable land has the highest productivity (a function of its fertility) and the

110

Anthropological Perspectives

lowest transportation costs (a function of its location) (Scott 1980; Fujita, Krugman, and Venables 1999). In an urban economy, location trumps fertility as the main determinant of land rent. It is no longer the combination of fertility and location that separates the most valuable plot of land from the least valuable one, but the location of land vis-à-vis the city core or the center of economic activity and transportation costs (Alonso 1964). The increase in land rent accelerates with the construction of transportation corridors because agricultural lands that were previously unconnected to the city core now have lower transportation costs. In India, which until the turn of the century was predominantly agrarian, powerful social groups owned the most fertile lands in its villages, and marginalized groups owned the most agriculturally unproductive, dry lands. Ironically, the heightened demand for urban land, combined with the Indian state policy that, as far as possible, in the interest of food security, only dry and infertile lands be acquired for urban, industrial, and infrastructural expansions, has made the land owned by marginalized groups into a high-demand market commodity. In short, the change in land rents from agrarian to urban is interacting in complex ways with older caste-based forms of agrarian land control to produce new conditions of land, labor, and credit relations. The conventional framing of periurban land conflicts, as taking place between farmers and industry or farmers and the state, overlooks this disruption of land-based agrarian social relationships and the ways in which property relations are being remade as different agrarian groups make their transition into an urban economy.

Periurban Land Markets in Bidadi, Bangalore Region A closer look at the rapid urbanization in the periurban area of Bidadi, located around thirty kilometers from the city of Bangalore along the BangaloreMysore highway, illustrates these unstudied dynamics of periurban changes in land rent. The Bidadi area started industrializing in the mid-1990s when the industrial parastatal—the public agency in charge of promoting industrial development in the state—set up an industrial zone, the Bidadi Industrial Area. The Bidadi Industrial Area is located within three village panchayats. One of the first factories set up within the industrial area was the Toyota factory. The area is now an attractive destination for automobile, auto parts,

Periurban Land Markets in Bangalore

111

and garment factories, which prefer to set up shop in periurban Bidadi rather than within Bangalore city both because land is cheaper in Bidadi than in Bangalore and because the proximity of Bidadi to Bangalore assures a good labor pool. The most powerful social group in the Bidadi area is landowners belonging to the Vokkaliga caste group, an intermediate-caste group that lies between the upper-caste Brahmins and the low-caste Dalits and tribals.3 The Vokkaligas, and equivalent intermediate-caste groups such as the Marathas in Maharashtra and Jats in Uttar Pradesh, are the power-wielders in their respective agrarian regions, exerting preponderant economic and political power over other castes because of their numerical, economic, and ritual superiority (Srinivas 1987). Because India achieved universal suff rage in 1947 in a predominantly agrarian society, these intermediate-caste agrarian landowners have been the backbone of electoral democracy (Bardhan 1984; Kaviraj 1988; Vanaik 1990). As an organized political constituency, postindependence land policies have consistently accommodated the interests of these agrarian propertied classes. Low-caste Dalits and tribals have historically worked on the land of these agrarian propertied classes. The rapid restructuring of the Bidadi land market is opening up new routes of emancipation for Dalits who have long been trapped within a debilitating agrarian caste/class system. The Dalits in Bidadi can be categorized into three groups: new political entrants, market aspirants, and coolie migrants. The new political entrants are beneficiaries of India’s recent reservation policies, adopted as part of its 1991 decentralization reforms to make democratic politics more inclusive. One-third of all electoral seats in local governments, urban and rural, will be reserved for social groups that have been historically marginalized or excluded, such as women, Dalits, and tribals. These political affirmative-action policies have led to the emergence of a new class of decision makers. The market aspirants include the Bidadi landowners. They own small plots of marginal land less than two-and-a-half acres in size. Many are effectively landless in that their holdings are less than an acre, which they use for subsistence cultivation. It is this subgroup that is using the increased market value of their previously unproductive dry land to enter new work and credit relations that are free from intermediate-caste control. The coolie migrants are unskilled informal and contract laborers who are migrating to periurban regions in search of work. The restructuring of land markets has

112

Anthropological Perspectives

varied impacts on each of these subgroups of Dalits, exposing them to new risks as they forge new forms of informal land, labor, and credit relationships.

New Political Entrants

The Bidadi region has a few relatively well-off Dalit households. It is members of these households who avail themselves of the reservation policies for Dalits and take turns becoming local elected representatives. At the time of my fieldwork, Sitamma was the woman Dalit representative in one of the Bidadi village panchayats. Sitamma’s family has been in politics for the past two decades: her husband was an elected representative between 2001 and 2005 and her brother-in-law was an elected representative before that. All the eighty Dalit households in the Dalit colony in which Sitamma lives are engaged in nonagricultural work: most of the men work in the auto-parts factories in the Bidadi Industrial Area, and the women work in the garment factories. Most residents work as unskilled, daily wage and contract laborers, and permanent factory jobs are highly coveted. The factories are reluctant to hire local labor as permanent employees, both because of the lack of requisite skills and of a fear of unionizing. But the factories are also beholden to village panchayats because of the permitting process. The culture of sifarish (recommendation)—access to jobs mediated through networks and whom you know—is common in India. The sifarish culture took a very particular form in rural India after the decentralization legislation of 1991. When a private-sector fi rm wants to build a residential, commercial, or industrial project in a village, after getting the agricultural lands converted into nonagricultural uses by the district-level revenue department, the firm has to get a building permit from the village panchayat. It is only after the village panchayat approves the building permit that the firm has legally acquired the lands to start construction. Elected members of the village panchayat frequently abuse this power and recommend particular local residents for permanent jobs. The factories generally oblige because they do not want any trouble from the local elected representatives. Sitamma explained the procedure for a village resident to get a job in the factory: You [the person looking for a factory job] go to the Adhyaksh [head of the elected representatives] and give him a form. The factory will

Periurban Land Markets in Bangalore

113

only accept you if the panchayat recommends you. The factory does not take local labor because they will do galatta [stir trouble]. But adhyaksh phone madthare [the adhyaksh—head of the elected representatives—will call], then they will agree. You cannot go directly to the factory for a job; it is only through recommendation. You need good marks in the exams. It works on recommendation and education. These recommendations are for permanent jobs, and sometimes even for coolie [daily wage] jobs.4 Sitamma repeated the phrase adhyaksh phone madthare multiple times during our conversation, reiterating the critical role of the village panchayat head as the gatekeeper of these factory jobs. Those village residents with close connections with the elected representatives have brighter prospects of landing the coveted permanent factory jobs. Sitamma is educating her son in engineering and is confident that he will get a permanent factory job on graduating. Her husband already has secure industrial work: he has a successful business that rents out earth-moving equipment for construction work. New political entrants like Sitamma’s household members have the skills and the networks to make a secure transition from an agrarian to urban economy.

Market Aspirants

The majority of Dalit landowners own marginal plots of dry land, less than two acres in size, and they lack the political, economic, and cultural capital to exert pressure on the Dalit elected representatives or to contest local government elections themselves. Somu is in his twenties and lives in a Dalit colony with his wife and two children. His younger brother has a bachelor of arts degree. Somu explains his brother’s frustration in not getting a job in the surrounding factories despite his college degree: “My younger brother has done a B.A., in Ramnagara [the nearest city located around ten kilometers from his village]. But he does not have a job. He went to work in the factory. If they give him a supervisor’s job, he will do it. But they are giving him mamooli [ordinary] helper’s work. He finished his B.A. seven years back, but he’s not doing any permanent job. Now, any work you give me, I will do. But that is not possible for him. He has a B.A.” Somu lists all the factories clustered around his village: “Toyota-Kirloskar, Eagleton, Technopark, Bombay Rayon,

114

Anthropological Perspectives

Film City. But you can get a job only through recommendation. Who will recommend us?”5 Unlike Sitamma’s son, Somu’s brother lacks not only the political connections to secure the coveted permanent factory jobs but also what Appadurai calls the “capacity to aspire” (2004). His brother, like many youngergeneration Dalits in these periurban regions, wants to be a part of India’s urban economy but does not have the “navigational capacities” to translate his aspirations into concrete realities. Sitamma’s son is doing his engineering degree; her nephew has enrolled himself in the government-funded vocational Industrial Training Institute. Somu’s brother, in contrast, studied the humanities in college. Somu has a growing apathy toward electoral politics. While he votes in elections, he lacks confidence in his elected representatives. Instead, he and other similarly situated Dalits view the market as his emancipatory route out of oppressive caste hierarchies. In addition, urbanization and industrialization are changing the job market for Somu and his fellow Dalits. Dalits who earlier worked through various forms of tenancy—ranging from bonded labor to seasonal leasing—on the land of the upper-caste landowners are now finding alternative sources of employment as informal, daily-wage laborers in the factories sprouting up along the highways. They are also in high demand in the hyperactive construction industry, and the tight labor market of the construction industry— construction work has to be completed in certain months before and after the monsoons—gives them more bargaining power with their employers. Somu captures this shift with his account: For eighteen years, I’ve worked at the Gowda’s [Vokkaliga’s] house, only in one house. He [the Vokkaliga] has large fields—banana, betel leaf, his fields are grand. That’s why they kept me, and others, there permanently for eighteen years. In 1986, I was paid Rs 7 coolie [daily wages].6 I stopped working for him in 1994. We have to work according to our free will. I wanted to work with swatantrata [independence]. Now I work for a construction contractor as a daily-wage laborer. He gives me Rs 150 per day. The bus is Rs 6 from Bidadi [the town nearest his village] to Ramnagara [where the construction work is], so that is Rs 12 up and down. If I work permanently, he’ll give me Rs 180 per day. I do not work permanently for anyone. If there is a problem with someone, then I will change to someone else.7

Periurban Land Markets in Bangalore

115

Somu’s use of the assertive language of swatantrata—a Hindi word that translates to “political selfhood” and has a strong resonance with India’s freedom struggles against the colonial state—and “free will” is partly because of the availability of informal jobs in the construction industry. These jobs, albeit of poor working conditions and lacking in security and benefits, increase Somu’s bargaining powers not only with his industrial employers but also with dominant caste landowners. Dalits now commonly negotiate their daily wages with agricultural landowners using the wage rates set by the industrial informal economy as the standard: “The construction contractor pays me INR 150 [US$3] per day. Why should I work on their [upper-caste landowners’] land for less?”8 Somu also has his one-acre plot of dry land. During the rainy season, he works on his field and returns to construction work during the dry season. Th is land allows Somu some independence from the construction contractors. If “there is a problem” with the contractor, he can leave the job and manage to feed his family through subsistence farming till he finds another job. Although younger-generation male Dalits are starting to assert their autonomy from dominant caste landowners through the market route of informal jobs, they often forfeit the long-term security of their landed assets for a short-term sense of autonomy. Somu’s neighbor, Venu, owns three dispersed plots of dry land. With the change in the market value of his dry lands, Venu sold a three-acre plot of dry land to an upper-caste landowner to meet immediate consumption requirements. “My sister’s marriage cost me INR 15 lakhs [Rs 150,000]. . . . For her marriage, I had an old zameen [land], near Ramanahalli [the neighboring village]. The Gowda’s [Vokkaliga’s] son bought it. I sold the land for 20 lakhs [Rs 200,000] in 2006 and conducted the marriage. I used to grow millet on this land; it was by the roadside.”9 Instead of pledging labor for credit, as was the common practice in his father’s generation, Venu sold a highway-adjacent plot of land to an uppercaste landowner. The lack of accessible and affordable credit options for Dalits makes it possible for dominant caste landowners to consolidate highwayproximate dry lands through distress sales by Dalits. Unlike their sons, the older generation lacks the physical strength to work in the urban economy. Earlier, most of the older Dalits supplemented the family income through dairy farming. They grazed their cattle on common grazing land and on the surplus land of the Vokkaliga landowners that their family worked for. Now, with the high demand for urban land, these highway villages are seeing a rapid privatization and depletion of common grazing

116

Anthropological Perspectives

lands. Vokkaliga landowners are revoking the earlier reciprocal privileges of allowing their Dalit laborers to avail of their surplus land for grazing without any payment. Vokkaligas now charge a rent of around Rs 6,000 [USD 120] per year for the use of their surplus dry land. All of the older-generation Dalits I interviewed were unhappy with their sons’ decision to alienate their dry lands, and many of them were ambivalent about breaking their relations of dependency with the Vokkaliga landowners. The women in these households were also disadvantaged by the privatization of common lands and the sale of their dry lands. Mothers complained that they had earlier reared goats on their dry lands, which provided their children with their daily dose of milk. But now, they have had to sell their goats, and with the unaffordable price of milk in an inflationary economy, they have had to remove milk from their children’s diets.

Coolie Migrants

Migrant, unskilled labor started moving into the Bidadi region over the past decade. Contractors who supply informal labor to industries generally bring these laborers from the most economically distressed regions of the country, accommodate them in poor-quality informal housing, and liaise between them and the industries. One of the largest informal settlements is located close to the Bidadi Industrial Area, and it houses around eighty informal workers. Here, tin sheds house an itinerant migrant workforce, all men, who work in a variety of informal factory jobs, including fitting, welding, and steel cutting. Around half of these workers are from the states of Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh—states that are sometimes called BIMARU, which is both an acronym as well as a Hindi word for sick [bimar], which reflects their economic performance. The other workers are from the most impoverished districts of Northern Karnataka, including Gulbarga, Raichur, and Gadag. These workers are attached to different contractors who are responsible for their wages and living arrangements. Contractors frequently move the workers around not only from one factory to another but also from one city to another, making the task of organizing them extremely difficult. For instance, none of the workers I spoke to in the informal settlement near the Bidadi Industrial Area had been moved to Bidadi from various parts of the country within the past year.

Periurban Land Markets in Bangalore

117

Factories are reluctant to hire local labor for fear of their unionizing (supra). The coolie migrants, then, not only compete with the local Dalits for unskilled daily-wage and contract labor in the factories but also are preferred to the local Dalits. The migrant workers are not landless: like the local Bidadi Dalits, they are small and marginal landowners who own agricultural land in their home villages. But because of the locational advantage of their land (dry land in rapidly urbanizing Bidadi as opposed to in a still predominantly poor agrarian region), the Bidadi Dalits insist on differentiating themselves from the paapa coolies [poor daily-wage laborers] who have migrated to Bidadi in search of work. A single plot of dry land, however marginal it may be in size, marks the social difference between the Bidadi Dalits with land and the coolie migrants without land (though these migrants are also owners of dry land themselves in their home villages). Local Dalits, however disparaging they may be of the paapa coolies, are often resentful of them as outsiders who are stealing their jobs. The surprising finding from the interviews with Bidadi coolie migrants is that many of them are not Dalits, and, more surprisingly, a small percentage of them are from the upper castes. Of the thirty migrant workers interviewed, six of them belonged to the higher Kshatriya and Vaishya castes, fourteen of them belonged to various subgroups within the dominant caste, six of them were Muslims, and only two were Dalits. Not only, then, is the restructuring of periurban land markets leading to an increasing market empowerment of the local Dalits vis-à-vis local dominant castes, but it is also radically unsettling the caste system as local Dalits now claim superior social status compared to higher-caste informal migrant workers from economically distressed regions.

An Old-Fashioned Class Analysis with New Categories As India makes its way from a state-led agrarian to a more market-oriented urban polity, the forms of land rent also change. Analyzing India’s periurban land markets as a rental conflict helps us make sense of some unexpected factions and frictions that are emerging from these ongoing land conflicts. A clear illustration of this new politics is the recent debate over compensation rates for expropriated land. The rules of expropriation affect land rent, as the compensation price for expropriated land is one of the factors that

118

Anthropological Perspectives

determine the new price regime for these in-flux land markets. The Indian state has been vacillating back and forth over the past decade on the question of what constitutes a fair compensation rate for expropriated land, and this back and forth is a reflection of formal land policy being in the crossfire of different fractions of capital over land rent. Incoming urban and industrial firms on whose behalf the state acquires agricultural land want the land compensation rate to be set as low as possible; the agrarian propertied class, on the other hand, wants it to be as high as possible. And in a rare coalition made possible by this particular moment of the urban transition, two historically antagonistic groups—upper-caste agrarian landowners and lowcaste Dalits, owners of marginal land who have long labored on the lands of the agrarian propertied class—now align together in demanding higher compensation rates for expropriated land. The changing land rents not only lead to unexpected alliances, but also reinforce existing fractures or generate new ones. Intra household inequalities, for instance, are exacerbated in these periurban land markets. The weakest household members—women and the older generation—are further excluded and made more vulnerable as control rights over land are vested with the younger generation male heads of household. New frictions emerge as different subgroups of Dalits are pitted in a fierce competition with one another over the new land rents. The local Dalit landowners (market aspirants) see themselves as occupying a higher social status than the paapa coolies. The conflict between the market aspirants and coolie migrants is further intensified as they compete with one another for the same, limited unskilled factory jobs. The changing land rents are also changing the inclusionary politics of marginalized groups. The younger generation male Dalits now commonly use the market—the higher market value of their previously unproductive land and the availability of alternative informal work in the factories and in construction—as exit strategies from a caste-ridden agrarian economy. But in so doing, they are voluntarily entering a poorly paid, exploitative informal economy. They are breaking the norms of reciprocal obligations in agrarian landowner-tenant relations and are entering an informal urban economy that lacks equivalent obligations either on the part of the state or the employers in guaranteeing informal workers basic benefits and security. Instead of holding onto their landed assets and capitalizing on future windfall profits, they are selling their highway-proximate dry land to intermediate-caste landowners in exchange for credit as acts of defiance. The market route offers the

Periurban Land Markets in Bangalore

119

periurban Dalits an alternative to the political system, which they perceive as exclusionary and even corrupt. The consolidation of power at the level of the village panchayats and the lack of economic resources among the poorer Dalits that would allow them to contest local elections or even influence the village panchayat has led to a growing discontent with the political system and an increasing reliance on the market as the path to autonomy and dignity. But the turn away from democratic politics toward the markets as an arbiter of social change also detracts from the ability of marginalized groups to collectively organize themselves during a precarious transitional period. The main drivers of change in these periurban land markets are large real estate developers, domestic industrial conglomerates, and multinational firms. As power and capital gets more and more consolidated in the hands of a few large corporations, the younger generation male Dalits enters these staggeringly unequal land markets not as a collective, but as individual market players. Not only does an analysis centered on land rents highlight these new alliances and collisions, it also provides an insight into the complicated and ambivalent decision-making calculus of differentiated subgroups of Dalits. It helps us understand why certain Dalits are voluntarily giving up their dry land assets instead of holding on to them, or why they are voluntarily entering a precarious informal economy fraught with insecurity. Framing periurban land conflicts as a distributional conflict over land rents harkens back to an old-fashioned class analysis, but one with new categories that are adjusted to the current context of an agrarian to urban transition. Current urban land policies in India work with the outdated categories of farmers, but as the rich scholarship on agrarian studies in India reminds us, the agrarian economy is a contested terrain riven with intersecting class, caste, and gender divisions. As these differentiated agrarian groups make an aspirational transition to an urban economy, the urgent task facing urban planners is to bring the agrarian political economy into an analysis of urban informal land markets. The lens of the changing forms of land rent during an agrarian to urban transition is one such effort to challenge these binary categories of agrarian/urban, and to point to a new periurban land politics that sits at the intersection of the agrarian and the urban.

This page intentionally left blank

PA R T III Public Policy Perspectives

This page intentionally left blank

T

his section turns to public policy and governance to address a basic question: how can public and private decision makers design policy and programs so that informal real estate markets evolve to meet current and future urbanization demands with access to necessary public goods for welfare and continued economic development? In many scenarios, informal markets emerged from restrictive government policies as well as from the absence of governance. After an initial period of slum removal policies, the global trend since the 1980s has been a gradual recognition of informal dwellers’ rights to the city and a move toward slum upgrading and recognition of squatters’ rights. Vinit Mukhija, in “Rehousing Mumbai: Formalizing Slum Land Markets Through Redevelopment,” discusses the major limitations of this now standard approach to ensuring wide access to public goods. He goes on to offer a new approach, based on redevelopment and rehousing strategies, to enable real estate markets themselves to provide better access to local goods and ser vices. He uses the Mumbai experience to illuminate successes and failures and draws lessons for what is needed for the implementation of this approach elsewhere. In “Tenure Regularization: Process and Experiences in Latin America,” José Brakarz goes beyond this project-based approach to propose a broader policy of assimilation of slums into the formal city. He offers a broad-based “slum regularization” policy to integrate informal settlements into the fabric of their cities and identifies what is necessary for such policies to succeed. Beyond integrating existing settlements, the author of the third chapter in this section offers a road map for dealing with the demand for informal settlements through planning for and investing in future land development. In “Making a Difference in the Predominantly Informal City,” David Gouverneur offers an approach that combines programs for slum upgrading with provision of preplanned, minimally ser viced sites for development, an effort commonly labeled “urban extension” under a rubric he calls informal armatures strategy. His plan steers the growth of the “self-constructed city” rather than trying to prevent it. Under his recommendation, local government selects and ser vices appropriate sites ahead of development and facilitates self-constructed housing on these sites. In contrast to uncontrolled informal settlement development, this program sets aside land for the public realm—streets, parks, sites for schools and other public services—thereby

124

Public Policy Perspectives

guiding the physical and nonphysical development of future, fast-growing urban places. In the final chapter, “Informal Land Markets: Perspectives for Policy,” Bish Sanyal asks the basic question: How should the state intervene in informal markets? The lack of access to public ser vices, including education, that characterizes informality presents challenges to the assumed positive outcomes of urbanization for social welfare and economic development. Policy regimes put forth here offer ways to affect the trajectory of the development of informal real estate markets to encourage the delivery of local public ser vices and infrastructure, with the ultimate goal of improving living standards for the majority of urban residents and of ensuring that urbanization continues to be associated with economic development in the twenty-first century.

CHAPTER 8

Rehousing Mumbai: Formalizing Slum Land Markets Through Redevelopment Vinit Mukhija

Mumbai is India’s financial and commercial capital. Paradoxically, the city is known for both its high real estate prices and huge slum population. It has recorded some of the most expensive real estate transactions in the world and, according to some estimates, has more slum dwellers than any other city (Mukhija 2003). Within Mumbai’s slums, property transactions are common, and anecdotal data suggests that real estate prices in the slums are also staggeringly high. Nonetheless, planners and economists usually consider land encumbered by slums to be less efficient, as its property values are often discounted due to the lack of formal titles and legal recognition, the inadequacy of physical infrastructure ser vices, and fragmented land ownership (World Bank 1993). Mumbai has tried several approaches to formalizing its slum lands. These include the leading conventional approaches of slum clearance and redevelopment, which involve the resettlement of slum dwellers on alternative (usually distant) sites; and slum upgrading, which is based on in situ and incremental improvements to slum dwellers’ housing through tenure legalization and infrastructure improvements. For almost twenty-five years, Mumbai has also implemented an unconventional program of slum redevelopment and on-site rehousing as a strategy to formalize the slums. This chapter focuses on this last approach. Mumbai’s slum redevelopment and rehousing strategy leverages the potentially high real estate value of slum land in the city. Slums are demolished,

126

Public Policy Perspectives

housing is rebuilt at a higher density, and, contrary to conventional slum clearance and resettlement, slum dwellers are rehoused in replacement housing on the former slum sites. In addition, new market-rate housing is also developed on the former slums, which cross-subsidizes the cost of the slum dwellers’ replacement housing. In some cases, the option of transfer of development rights (TDR) is utilized too, and the cross-subsidizing, marketrate housing is built on alternative sites. The key policy intervention that facilitates slum redevelopment is a change to the land development regulations that allows for an increase in the intensity and density of redevelopment in the city’s slums.1 This increase in the permitted intensity and density of development attracts market-based, private developers and helps generate the cross-subsidy for the slum dwellers’ housing. According to the current program of slum redevelopment and rehousing being implemented in Mumbai—the Slum Rehabilitation Scheme (SRS)—slum dwellers receive “free,” or completely cross-subsidized, replacement housing (Government of Maharashtra 1997; Mukhija 2003). This chapter explains the origins of this slum redevelopment and rehousing strategy, its evolution, and its administration. It places the SRS strategy in the context of conventional slum improvement approaches and discusses its achievements and prospects in improving living conditions for slum dwellers in the city of Mumbai, all of India, and potentially around the world. Slum redevelopment is an unusual strategy for assisting slum dwellers. Typically, progressive planners and policy makers oppose redevelopment because it usually leads to the displacement of the poor. The poor can be either directly displaced by the new land use or indirectly displaced through an increase in housing costs, including higher rents, property taxes, and maintenance costs. Mumbai’s slum redevelopment and rehousing strategy, however, avoids some of the shortcomings of redevelopment by resettling slum dwellers on their original sites in free housing of a prescribed size. Slum dwellers also receive property tax rebates and funding support for housing maintenance expenses from project developers. The SRS mandates that slum dwellers cannot sell their new homes for ten years, although the government does not have a credible way of enforcing this requirement. However, these carefully but narrowly defined benefits have a downside. In some cases, they prevent redevelopment projects from being financially viable to developers. In other cases, slum dwellers find the defined benefits inadequate and unfair. A deregulation of the prescribed benefits may lead to negotiations between slum dwellers, landowners, and developers, and may result in more hybrid forms of

Rehousing Mumbai

127

upgrading and redevelopment, as opposed to comprehensive redevelopment. Thus, as explained here, the rehousing strategy has significant potential, but its implementation needs to be flexible and it is not a panacea for the city’s slums. Consequently, in addition to the slum redevelopment and rehousing approach, other strategies for formalizing the legal status of slums, and improving housing and living conditions within them, are also needed in Mumbai. The data for the chapter come from multiple sources, including primary research in Mumbai and secondary material, including government documents, published reports, and newspaper and news magazine articles. It is a longitudinal study, begun nearly fifteen years ago and updated every two or three years. Earlier reports of the findings are published in several journal articles (Mukhija 2001a, 2001b, 2002a, 2002b, 2004, 2006; Sanyal and Mukhija 2001), and a book, Squatters as Developers? Slum Redevelopment in Mumbai (Mukhija 2003). After this brief overview, the following section of the chapter introduces the city of Mumbai as the setting for its unusual redevelopment strategy. The third section situates the slum redevelopment and rehousing approach in the context of conventional slum housing formalization and improvement strategies. The fourth section, which explains how the city’s slum redevelopment strategy works, is the heart of this chapter. It discusses how this unconventional strategy started and evolved. The fi nal section reviews the future of slum redevelopment and rehousing, assesses its prospects and challenges, and concludes with policy recommendations.

Mumbai: “Urbs Prima in Indis” The British erected the Gateway of India in Mumbai, a massive triumphal arch facing the Mumbai Harbor, to commemorate King George V’s visit to India in 1911. It includes a plaque that proclaims “Urbs Prima in Indis,” or “foremost city in India.” More commonly, Mumbai is known in India as the “city of dreams” (Dwivedi and Mehrotra 1995; Mehta 2004). It is the capital of the state of Maharashtra, India’s wealthiest province. In addition to being the center of India’s movie and entertainment industry, it is the country’s most significant economic hub, and many national financial institutions and corporate headquarters are based in the city. As a result of India’s economic liberalization reforms in the 1990s, several multinational corporations have

128

Public Policy Perspectives

made Mumbai their South Asian regional head offices. Mumbai is also one of the most populous cities in the world, with almost twelve-and-a-half million residents, and its metropolitan area houses more than twenty million people. The city and its region attract migrants from all over the country, making it a bustling, cosmopolitan metropolis. This intense activity and large population is based within the confining, peninsular geography of Mumbai. The city started as a group of seven islands, which were subsequently connected through successive land reclamation projects by the British. The original seven islands were also later merged through reclamation with the neighboring islands of Trombay, to the east, and Salsette, to the north, to form Greater Bombay. The southern part of Mumbai, formed primarily by the original seven islands, is known as the Island City. The northern part of the city, based mostly on the original Salsette Island, forms the suburban district of Mumbai. The district is divided into the Western and Eastern suburbs, with the former being the more sought after and expensive location. Due to the city’s spatial constraints, on the one hand, and its significant economic success, on the other, property values in Mumbai have historically been high. According to some accounts, during the nineteenth century, land prices in Mumbai were comparable to prices in London (Dossal 1996). Critics argue that in addition to Mumbai’s geography, the city’s restrictive development regulations have also artificially constrained the supply of usable floor space and pushed its property values higher. According to Berkeley city planner David Dowall, real land prices in Mumbai increased by 720 percent between 1966 and 1981 due to the city’s strict development regulations (1992: 18). After economic liberalization, as demand for floor space in Mumbai increased, property values again rose spectacularly in the early 1990s. In the mid-1990s, real estate prices peaked, with some of the most expensive property transactions in the world recorded in the city, particularly in the Island City (Economist 1995; Nayar 1996). After the peak of 1995–1996, property values in the city fell significantly (Table 8.1), but by 1998, they had started to recover and had climbed back to the 1993 levels (Colliers Jardine 1998). Through the 2000s, Mumbai continued to have some of the most expensive real estate in the world (Economist 2012). Anecdotal data suggest that real property values increased by about four times between 1998 and 2012. The city’s wealth, however, has been unevenly distributed. According to the 1991 census estimates, over half of Mumbai’s population of almost ten

Rehousing Mumbai

129

Table 8.1. Residential Property Values in Mumbai (rupees/square foot)  1986

1990

1994

1998

Island City (South Mumbai): Colaba 1,050 Marine Drive 2,250 Malabar Hill 2,800

2,250 3,500 3,500

11,000 11,000 17,500

8,750 11,250 10,500

Western suburbs: Bandra (West) Andheri (West) Borivli (West)

1,850 550 700

2,250 1,150 1,200

9,500 5,750 4,050

5,750 3,150 3,000

Eastern suburbs: Ghatkopar Thane Kalyan

600 288 225

1,000 525 375

2,700 875 925

4,250 1,650 1,000

Source: Accommodation Times 1998.

million lived in slums (Panwalkar 1996). 2 The city grew by about two million residents in the 1990s, and, according to the 2001 census, about 54 percent of its population lived in slums (UN-Habitat 2003). Access to sewers and toilets has been particularly problematic in Mumbai’s slums. Overcrowding has also been a significant issue, with almost 80  percent of households living in homes smaller than a hundred square feet (Afzulpurkar 1995: 8). In addition, Mumbai’s slum dwellers have faced the brunt of politically driven slum clearance and beautification programs. Over the years, however, they have increasingly become a more important constituency in Maharashtra’s and Mumbai’s competitive electoral politics. Although a number of parties are active in the state and the city, the main competition is between the centrist Congress-I and the center-right Shiv Sena, a regional party. Typically, the Congress-I and its coalition partners have been in power at the state level, while the Shiv Sena and its allies have usually led the administration in Mumbai. Both parties have often clashed on how to address Mumbai’s slums. In spite of India’s constitutional amendments in the early 1990s that decentralized authority and granted municipalities more decision-making power, the state government still plays a significant role at the local level and controls most of the political and institutional authority, including planning and housing decisions. For example, the city does not

130

Public Policy Perspectives

have its own independent planning agency; the state government is responsible for preparing and approving Mumbai’s long-range development plans. The state government has also taken the lead in attempting various strategies to improve living conditions for Mumbai’s slum dwellers.

Slum Strategies India achieved its independence from the British in 1947. Around that time, several developing countries gained freedom and, like many postwar developed countries, initiated programs of slum clearance within their major cities. In Mumbai, with the support of the national government, a major slum clearance initiative was started in 1956. Slum clearance was inspired by modernist ideas about architecture and urbanism, and aimed to relocate slum dwellers in new, modern housing in alternative locations. The new housing would be less crowded and better ventilated and have better sanitation. Typically, slum clearance also aimed to redevelop former slum sites into more profitable land uses. The strategy, however, was relatively unsuccessful in improving the living conditions of slum dwellers. It was far easier to demolish slums than it was to build new housing. Research suggests that slum clearance programs usually led to a loss in the number of housing units (Abrams 1966). In cases where slum dwellers were lucky enough to be resettled in alternative housing, the new locations made it difficult for many to continue with their previous jobs. Some jobs were lost due to the added commuting distance between the new houses and old jobs, and others were lost because the new built environment made it difficult to continue with some of the informal economic activities of the old slums. Many resettlement projects also destroyed social networks as former neighbors were often relocated in dispersed and distant places. As opposition to slum clearance programs grew from slum dwellers themselves, civil society, and academic research around the world (Abrams 1966; Gans 1962; Jacobs 1961; Turner 1968), demolition and redevelopment ideas became less prominent in progressive housing strategies. Slum clearance was replaced with the more modest and measured approach of providing basic infrastructure ser vices and amenities to improve housing and living conditions within slums. Along these lines, the Maharashtra state government established a Slum Improvement Board, and Mumbai’s Slum Improvement Program was launched in 1971.

Rehousing Mumbai

131

As policy focus shifted to housing improvement programs within existing settlements, the World Bank took the lead in promoting a new strategy of formalization and tenure legalization through its Slum Upgrading Programs (SUPs). Slum upgrading was influenced by the seminal work of John Turner on the logic and potential of informal housing in developing countries (1967, 1972, 1976) and aimed to transform informal squatters into formal owners by providing land titles (De Soto 1989; Doebele 1983; Pugh 1990). In India, the first World Bank–assisted SUPs were introduced in Madras, now known as Chennai, and Calcutta, now called Kolkata (Cohen, Madavo, and Dunkerley 1983). In 1985, the World Bank, in association with India’s national government and the Government of Maharashtra, started the Bombay Urban Development Project (BUDP). A key component of the BUDP was a program of slum upgrading to legalize land tenure in Mumbai’s slums. Mumbai’s SUP offered a thirty-year renewable leasehold tenure to cooperatives of slum dwellers. Although the World Bank’s preference and the conventional wisdom (Friedman, Jimenez, and Mayo 1988; Jimenez 1983; Malpezzi and Mayo 1987; World Bank 1993; also see De Soto 1989, 2000) was to provide private titles to households, in the absence of clear property boundaries within settlements, or cadastral maps, the collective approach was adopted. The project had an initial target of a hundred thousand households receiving titles. However, by the time the program concluded in 1994, after a four-year extension, less than a quarter of the target households accepted the opportunity of legal tenure (World Bank 1997). Most of the households were unwilling to pay even a nominal cost for tenure legalization. Mumbai’s experience with the underwhelming interest in legal titles was not unique. Several scholars have argued that development planners overestimate the demand for titling programs. They suggest that the perception of security of tenure, which can come from just the possibility of obtaining legal title, can be enough for households to feel secure (Doebele 1983). Others suggest that poor households in developing countries are uninterested in legal titles because they can rarely use them as collateral to raise loans (Smets 1997). With the limited success of conventional strategies in Mumbai, in the late 1980s, the alternative approach of slum redevelopment and rehousing emerged. This approach was similar to Bangkok’s innovative land-sharing strategy, in which slums were redeveloped, squatters rehoused on a part of the original site, and the remaining part used for building market-rate housing (Angel and Boonyabancha 1988). However, unlike in Bangkok, Mumbai’s slum dwellers had the right to opt into or reject the redevelopment option. In

132

Public Policy Perspectives

Bangkok, slum dwellers had to agree to land-sharing proposals or face eviction (Badshah 1996). In Mumbai, the government anticipated that the slum dwellers would find the redevelopment option more attractive than the status quo.

Rehousing Mumbai Mumbai’s strict planning limits on the allowed intensity and density of development are a legacy of its historical emphasis on urban decongestion and on balanced regional development. Th is regulatory context, however, was challenged, starting in the 1980s, with proposals from multiple state government committees to increase Mumbai’s permitted floor-area ratio (FAR) to facilitate the redevelopment of the city’s slums (Kerkar 1981; Sundaram 1989). In 1984, the state chief minister also indicated his support for increasing the allowed FAR to make redevelopment in Mumbai feasible (Daily 1984). Subsequently, a series of three different slum redevelopment and rehousing strategies, facilitated through a higher permitted FAR, were introduced in Mumbai.

The Prime Minister’s Grant Project (PMGP): Slum Reconstruction

While the World Bank’s BUDP project was launched in January 1985, in December of that year, the state government introduced the Prime Minister’s Grant Project (PMGP) with the national government’s financial support. Earlier that year, for the first time, the Shiv Sena and its allies won Mumbai’s municipal council elections. To check the Shiv Sena’s growth, the national government led by the Congress-I made a major grant to the state government, also led by the Congress-I, for improving the living conditions of Mumbai’s poor (Dua 1989). The PMGP focused in particular on Dharavi, Mumbai’s centrally located, largest slum (Desai 1988). The project presented Dharavi’s slum dwellers with two land formalization choices. They could either opt for a conventional tenure legalization program, similar to the World Bank–assisted SUP, or an unorthodox redevelopment option, called Slum Reconstruction. In Slum Reconstruction, which was made feasible by a modest increase in the maximum allowed FAR, the slum dwellers would be rehoused on their original sites in new, owner-occupied, medium-rise apartments of 180 square feet

Rehousing Mumbai

133

Table 8.2. Subsidies in Mumbai’s Different Slum Redevelopment and Rehousing Programs (all prices in rupees) Program

Approximate Subsidy

Notes

PMGP (1985)

15%

A subsidy of 15% and an additional subsidy in the form of an interest-free loan for 20% of the cost amount.

SRD (1991)

61%

Households were expected to contribute Rs. 25,000 out of an estimated cost of Rs. 65,000.

SRD (1992)

77%

The contribution amount of participating households was reduced to Rs. 15,000.

SRS (1995)

113%

Free housing, plus a Rs. 20,000 corpus fund for future maintenance expenditure.

PMGP = Prime Minister’s Grant Project; SRD = Slum Redevelopment Scheme; SRS = Slum Rehabilitation Scheme. Source: Mukhija 2002a, 2003.

(about 17 square meters) carpet area. 3 Both housing improvement options were to be implemented on a mostly cost-recovery basis (i.e., slum dwellers would pay most of the cost of the improvements), and slum dwellers’ cooperatives were to receive thirty-year, renewable leases to their land. The redevelopment opportunity was significantly more expensive than the tenure legalization program, but the PMGP provided a small subsidy and a partial interest-free loan to households to finance reconstruction costs (Table 8.2). The PMGP planned to rehouse 3,800 households in new apartments in Dharavi4 and expected to upgrade 25,000 homes through tenure legalization (MHADA 1993). However, according to officials of the PMGP, Dharavi’s residents were more interested in the slum redevelopment and rehousing option than in situ upgrading though tenure legalization (Mukhija 2003).

The Slum Redevelopment Scheme (SRD)

In 1990, the Shiv Sena’s leader declared in an election promise that if his party was elected to lead the Maharashtra state assembly, it would institute a program of “free housing” through slum redevelopment for Mumbai’s slum

134

Public Policy Perspectives

dwellers. Like the Slum Reconstruction program active in Dharavi, slum dwellers would be rehoused in new, owner-occupied apartments on their original sites. Unlike the PMGP’s program, Shiv Sena’s leader proposed that the cost of housing would be entirely cross-subsidized by developers building additional market-rate housing on the same sites (Times of India 1990). To make the cross-subsidy viable, Shiv Sena’s state government would increase the maximum allowed intensity and density of development on former slum sites. The Shiv Sena, however, lost the state election to an alliance led by the Congress-I. In response to the dramatic promise from the Shiv Sena, the new state government led by the Congress-I decided to introduce its own citywide rehousing initiative for Mumbai’s slums: the Slum Redevelopment Scheme (SRD) (Times of India 1991). Through the SRD, the Congress-I government invited private developers to redevelop the city’s slums and rehouse slum dwellers in new, owner- occupied apartments of 180 square feet (about 17 square meters) carpet area. The redevelopment projects would require slum dwellers’ consent, and they would only pay a part of the cost of construction. The rest of the construction cost, as in Shiv Sena’s election proposal, would be cross-subsidized by additional market-rate housing built on the same site. Through SRD, the state government would increase the maximum allowed FAR to 2.5, an increase of almost 100 percent, to make projects viable. It, however, also proposed to cap developers’ profit from redevelopment to 25 percent of their investment and stipulated that FAR for each approved project would be decided on a case-by-case basis. The state government’s initial proposals for SRD suggested that slum dwellers would contribute Rs 25,000 (almost 40 percent of the estimated cost of construction) for their homes. However, in 1992, before the scheme was finalized, the government reduced slum dwellers’ contribution to Rs 15,000 to make SRD more attractive to slum dwellers (see Table 8.2). There was, however, little progress in implementation. Private developers were skeptical about the viability of projects and critical of the cap on profit. They also criticized the government for complicated, unclear, and unpredictable approval procedures (Afzulpurkar 1995).

The Slum Rehabilitation Scheme (SRS)

In 1995, the Shiv Sena won the Maharashtra state assembly elections for the fi rst time. The party had repeated its campaign promise of free housing.

Rehousing Mumbai

135

Although Shiv Sena’s leader had claimed that his party would rehouse all of Mumbai’s slum dwellers in five years, it is unlikely that anyone took the claim too seriously. Nonetheless, the prevailing high property prices in Mumbai helped make the cross-subsidy approach seem feasible to both the electorate and policy makers. The new state government of Maharashtra decided to replace the previous government’s SRD with a new program of full cross-subsidy and called it the Slum Rehabilitation Scheme (SRS). The state government formed a high-level committee to explore how to structure the new program. The committee was composed of a range of well-respected stakeholders from Mumbai, including policy makers, private developers, and civil society representatives (Afzulpurkar 1995). On the basis of the committee’s recommendations, the Maharashtra state government fi nalized the details of the SRS (Government of Maharashtra 1997). It made all slum dwellers living in Mumbai before January 1, 1995, eligible for slum redevelopment, cross-subsidized rehousing, and increased the size of the new houses to 225 square feet (about 21 square meters) carpet area. All redevelopment projects would need the consent of at least 70 percent of the eligible households in the redevelopment area. The state government also mandated that developers provide a corpus fund of Rs 20,000 per house for future maintenance expenditures and added a property tax abatement of ten years for slum dwellers. The government also decided to make SRS more attractive for private developers. It removed the cap on profit and tried to make projects more predictable. Although it left the maximum allowed FAR at 2.5, it made the decision-making process more transparent. The government divided Mumbai into three zones with different, specific ratios between the area of replacement housing built for slum dwellers and the area allowed for the sale of market-rate housing (Table 8.3). In coveted south Mumbai (Island City),

Table 8.3. Ratio Between the Area of Replacement Housing and Market-Rate Housing, Slum Rehabilitation Scheme Zone Island City Suburbs Difficult areas

Replacement Area

Market-Rate Area

1 1 1

0.75 1 1.33

Source: Government of Maharashtra 1997.

136

Public Policy Perspectives

Table 8.4. Progress and Achievements of the Slum Rehabilitation Scheme

Year 1998 (August) 2000 (March) 2011 (July)

Completed Units of Replacement Housing

Number of Approved Projects

2,242 3,486 126,562

367 NA 1,529

Sources: Government of India 2012; Mukhija 2003; Times of India 2000.

where potential sales prices of market-rate housing were the highest, developers were offered the lowest ratio of market-rate housing. In places like Dharavi—declared as “difficult areas”—where potential sales prices were lowest and the existing high density made construction costs high, developers were offered the highest ratio of market-rate housing. The SRS also recognized that the densities within some slums were so high that once developers built the replacement housing for slum dwellers, they would not be able to build all of their allowed market-rate housing if the FAR was limited to 2.5. To keep such projects viable, the SRS allowed developers to build their share of market-rate housing in alternative sites in the city or to sell their rights to others through the use of TDR instruments. To limit the use of the transferred development rights in the more traffic-congested parts of south Mumbai, the government stipulated that TDR could only be used on sites north of the originating site. TDR-receiving sites could be built to a maximum FAR of 2.5. The Shiv Sena–led state government finalized the rules and regulations in 1997 (Government of Maharashtra 1997). By that time, however, Mumbai’s property market had cooled off from the spectacular highs of the mid1990s. Progress on SRS projects was slow and adversely affected by the downturn in the market. By March 2000, fewer than 3,500 replacement housing units had been constructed and occupied by the city’s slum dwellers (Times of India 2000). A 2012 audit by a national government agency—the Comptroller and Auditor General of India—indicates that there has been progress in the pace of construction of slum redevelopment and rehousing units (Table 8.4). However, critics point out that in a city with about six million slum dwellers, the SRS’s achievements are inadequate. They also point

Rehousing Mumbai

137

to multiple examples of corruption in SRS projects identified by the audit report (Government of India 2012).

Conclusion: Challenges and Prospects Mumbai’s ambitious and unusual slum redevelopment and rehousing strategy faces several inherent challenges and limitations. First, construction fi nance is not easily available for most projects. Second, past experience indicates that redevelopment projects take too long to implement. Third, finding appropriate temporary housing for slum dwellers during the construction process is difficult, which contributes to delays. Fourth, about a fift h of Mumbai’s slum dwellers live in locations unsuitable for redevelopment, such as on hill slopes or under power transmission lines (Afzulpurkar 1995). Finally, in the long run the complete cross-subsidy strategy is likely to be fi nancially unsustainable: as housing supply increases, in part through redevelopment projects, property values will fall. Given such constraints, it is not surprising that the new state government elected in 1999 considered canceling the scheme. Only around three thousand replacement housing units for slum dwellers had been built by that time. However, after almost a year and a half of policy debates and intense lobbying by both private developers and slum dwellers, in March 2001, the Congress-I state government declared its support for redevelopment and its intention to continue with the SRS (Times of India 2001) since it was unable to come up with a viable alternative strategy. Subsequent state governments, although critical of the SRS, have also continued with the program, and it is still the main strategy for improving slum housing conditions in Mumbai. In the decade since the Congress-I government decided to persist with the SRS, by July 2011, over 125,000 units had been constructed and occupied. This accomplishment is at the same time significant yet far less than what Mumbai’s slum dwellers need. One of the key merits of Mumbai’s slum redevelopment and rehousing approach is that it is a land readjustment strategy that in addition to leveraging high land values to pay for the cost of infrastructure and redevelopment, can potentially redistribute wealth and create new opportunities for slum dwellers (Mukhija 2006). In a city like Mumbai, with sharp inequality and uneven distribution of wealth, such a strategy is politically attractive. It is likely, however, that progress in redevelopment, particularly if it is to

138

Public Policy Perspectives

benefit slum dwellers and result in valuable new housing for them, will be slow, messy, and contested. The city may have more success in improving slum dwellers’ housing conditions if its redevelopment strategy is implemented with some flexibility and if policy makers do not consider redevelopment as a magic bullet or the only viable solution in the city. Deregulating the narrowly prescribed benefits of the SRS, particularly the stipulation of completely cross-subsidized housing of a specific size, may lead to more innovative project arrangements through negotiations and compromises between stakeholders—private developers and slum dwellers. It may also lead to hybrid projects of redevelopment and in situ upgrading. Deregulation of prescribed benefits is likely to lead to larger housing for slum dwellers currently in better locations and fewer benefits for slum dwellers currently in less desirable locations. Better-organized groups of slum dwellers are also likely to be more successful in negotiating greater benefits, which may be an incentive for communities to get orga nized. Slum dwellers’ benefits will change over time as the property market fluctuates. In some cases, slum dwellers may have to contribute to the cost of their new housing; some slum dwellers will be willing and able to contribute, while others will not. This may lead to innovative projects that combine partial upgrading, partial redevelopment, partial resettlement, partial land readjustment, and partial payment of housing costs by beneficiaries. As a consequence, the city may see more hybrid forms of upgrading and redevelopment instead of comprehensive redevelopment, and a richer, more complex, and intricate city with more varied housing options for the poor may develop. Both state and local government can also help in several other ways to improve the success of the SRS. In addition to assisting with construction finance and temporary housing, public agencies can play a role in helping to address confl icts and property-based disagreements, which are likely to increase if slum dwellers’ benefits are deregulated (Government of India 2012; Wissink 2013). The government, perhaps with the active support of Mumbai’s vibrant civil society and nongovernmental organizations, should also ensure that slum dwellers have full access to technical support and information in their decision making and negotiations with the private market actors. In addition, the government must provide the slum dwellers with legal and physical protection from any potential coercion from developers (Weinstein 2008). One of the noteworthy features of Mumbai’s rehousing approach is that slum dwellers have the opportunity to approve or reject redevelopment proposals, and projects cannot be initiated without their

Rehousing Mumbai

139

approval. Preserving and strengthening this defining characteristic of the SRS is important. Ensuring that public agencies enforce contracts and regulate the quality of the new housing is also vital. Further, if the program results in more hybrid projects in Mumbai, urban design and planning coordination will become more necessary and complicated, which will require more government involvement and leadership. Perhaps most important, planners, policy makers, and slum dwellers need to be realistic about the potential of the SRS and cautious about the seduction of redevelopment (Patel 2013). Although the strategy has some notable achievements and the large number of approved projects suggests that it also enjoys the support of many slum dwellers in Mumbai, it is difficult to implement and insufficient for addressing the needs of all of Mumbai’s slum dwellers. The city’s slum dwellers also need alternative policy options, particularly programs that are easier and cheaper to implement. Policy makers need to make sure that the focus on redevelopment does not cause the city to abandon or neglect other strategies of slum improvement, including basic slum infrastructure improvement programs and tenure legalization. Although some slum dwellers may be more interested in slum redevelopment and rehousing, it may not be a fi nancially or physically viable strategy for their slums. With these caveats, Mumbai’s slum redevelopment and rehousing strategy might also have some potential in other cities where property values are high enough to support cross-subsidies and where slums are dense and located in relatively central locations. Many cities in India and other parts of the developing world have grown significantly and, like Mumbai, are likely to have slum settlements that were once in peripheral locations but are now more centrally located and have potentially high real estate values. The Mumbai experience, however, also clearly demonstrates that policy makers must limit their expectations. Mumbai’s slum redevelopment and rehousing approach is likely to be more successful if it is implemented with flexibility and if it is considered part of a bundle of alternatives as opposed to a single policy panacea.

CHAPTER 9

Tenure Regularization: Process and Experiences in Latin America José Brakarz

The absence of formal tenure among city dwellers is a widespread concern in Latin America. The region has one of the world’s highest rates of urban informality. On average, roughly one in every three urban residents lives in informal settlements. Consequently, these settlements and their place in the broader society and housing market have become an important policy consideration for many Latin American nations. These countries have responded with regularization programs to integrate these settlements into the fabric of their cities. These programs include the provision or upgrading of basic ser vices and offering some type of tenure security to the residents of informal settlements. These efforts yield multiple benefits, ranging from increasing home values to improving family health. Models of regularization span from the relatively simple process of issuing rights to occupation of the parcel to the full incorporation of the residents to the city, with titles accompanied by a minimum set of urban ser vices. However, as the experience of several Latin American governments has proven, implementation of regularization programs is rarely straightforward or easy. It requires both regulatory changes and intense technical work. Complicating efforts are the informal residents’ mixed attitudes toward the programs. While agreeing to (or soliciting) legal ownership has benefits, these residents realize that formality also brings new responsibilities, such as an obligation to pay fees for urban ser vices and property taxes. In addition, when land to be regularized is privately owned, further hurdles arise, particularly if the landowner contests the program. As will be seen,

Tenure Regularization in Latin America

141

the track record of past and ongoing attempts at regularization has been mixed, but studying these processes can teach valuable lessons about the requirements for successful regularization.

Urban Informality Urban informality is a condition that applies both to entire subdivisions that are not properly approved by city governments—because the land has been illegally subdivided or they lack the required infrastructure—or to irregular settlements located in inadequate areas and lacking basic urban ser vices. The combination of properties in these irregular subdivisions and the countless houses built in informally occupied land accounts for the significant percentage of the population living in informal settlements throughout Latin America. This number averages about 30 percent but can reach up to 70 percent, as in the case of Haiti (Figure 9.1). Ultimately, informality serves as an alternative to a locality’s low stock of affordable homes. National housing censuses verify this problem by publishing statistics that quantify the number of homes that are in precarious conditions, have poor access to infrastructure or are experiencing overcrowding. Th is is referred to as the qualitative housing deficit. More often than not, much housing in informal settlements is undercounted in these censuses. Nonetheless, depending on the country, statisticians label dwellings without legal status as a slum, illegal, or informal unit. Informal land development often occurs at the fringes of the cities with the simple conversion of agricultural land to urban uses, creating illegal subdivisions with no ser vices and the subsequent sale of small unregistered plots to low-income people. Land promoters are the usual agents in this process, either forcing or enticing landowners to sell their properties or organizing land invasions. Since lots in the formal market are expensive, poor migrants to the city have no alternatives but these irregular subdivisions to establish themselves in the city. A second form of informality is squatting on residual or inadequate inner-city land, resulting in slum formation. In contrast to the irregular subdivisions, these settlements lack regular street patterns and basic services, including formal water, sewer, drainage, and garbage collection. Their disorganized growth in often precarious locations, like steep hillsides or bordering polluted rivers, expose their residents to unhealthy and dangerous

142

Public Policy Perspectives

100 90 80

% Population

70 60 50 40 30 20 10 0

Not in slums

In slums

Figure 9.1. Percentage of population living in informal settlements in Latin America by country. Source: UN-Habitat 2012.

living conditions. However, given their proximity to city centers, these areas attract sizeable contingents of low- and even middle-income people. In many Latin American cities, the presence of complex land-use regulations also contributes to informality. For example, local subdivision regulations tend to require minimum lot sizes, set-asides for community use (schools and parks), and costly street layouts and ser vices (preinstalled water, sewage, and drainage systems) that render the parcel prices too high for low-income buyers. These regulations do not differentiate among rich and poor areas. Rather than contribute to orderly development, these onerous regulations incentivize the illegal land market, with their low-priced, barely ser viced lots. The inadequacy of land registries is another contributing factor to informality. While a primary issue is the relatively high cost of obtaining formal titles, municipal cadastral systems in many Latin American cities do not count informal settlements, making it difficult to register the plots and obtain property titles. Given these conditions, national and local leaders who have developed public policies to address informality have emphasized remedial approaches. Their policies focus on accepting the current settlement patterns and attempting to incorporate them into the city fabric. They see informality as more than the absence of ownership papers; they also see it as a phenomenon

LAC

Tenure Regularization in Latin America

143

closely associated with poor living conditions and the lack of urban ser vices. Regularization is thus a process of incorporating citizens to the city both in urban and social terms.

Rationale for Regularization Many policy analysts and scholars support regularization in its various forms in the belief that it has positive impacts for residents. Here are some of their arguments: Legalization promotes home investments: Regularization offers security of tenure, which translates into strong motivation for families to invest in their most important asset—their homes. Titles ensure that those investments can be passed on to the next generation and that the homes are protected from legal challenges or forced removal. A quasi-experimental study designed by Field (2005) about households that participated in a nationwide titling program in Peru (in which 1.2 million property titles were distributed to urban squatters on public land between 1996 and 2003) shows that strengthening property rights in urban informal settlements has a significant effect on residential investment: compared with the control group, the rate of housing renovation rises by more than two-thirds of the baseline level. Titling increases house values. In addition to encouraging home investment, titling per se increases the value of properties, contributing to increases in family wealth. Galiani and Schargrodsky (2012) found that regularization led to an 18.5 percent increase in house values in Buenos Aires. Th is quasiexperimental study also demonstrated other effects of regularization. Compared with a control group, 1) families that received titles substantially increased their housing investments; 2) the built area of these homes increased by 12 percent; and 3) the overall index of housing quality (defined in the study) rose by 37 percent. Additionally, the study showed that security of tenure contributes to good family health and also correlates positively with smaller family sizes. This latter result likely occurs with the combination of home improvement and better access to public ser vices, which tends to accompany

144

Public Policy Perspectives

regularization initiatives. For further discussion of these findings and additional results, see Chapter 3 by Galiani and Shargrodsky. Regularization is good urban policy: Some degree of infrastructure upgrading normally accompanies regularization initiatives in order to bring the areas into compliance with minimum standards under local land-use regulations—even if local government adds flexibility to accommodate the irregular subdivision patterns. The ser vices that accompany regularization initiatives are the main factors responsible for the health, urban, environmental, and social benefits of the policy. Titling increases government revenues: Incorporating illegal neighborhoods into the formal city increases government revenues through the collection of property taxes and reduction in illegal utilities connections, a common feature of irregular subdivisions and neighborhoods. Notably, current research does not prove one of the common beliefs about regularization: that it increases access to credit. Galiani and Schargrodsky’s study of Buenos Aires (2012) found that providing households with titles had no effect on access to credit cards and bank accounts or on access to nonmortgage, formal credit from banks, governments, or cooperatives (less than 10 percent of the families in the study had access to at least one type of formal credit). As banks need secure collateral to guarantee loans, due to the protective context of Latin American judicial systems, recently titled properties are not easily foreclosed.

How to Regularize Property regularization is not a simple process but involves a number of interested parties and the resolution of complex legal and technical issues. Experience has shown that successful regularization efforts comply with the following preconditions. Special legislation to facilitate the regularization process: Allowing informal properties to be legalized requires special legislation, since they are often located on land that by law should not have been occupied or subdivided in the first place or has been illegally occupied

Tenure Regularization in Latin America

145

by squatters. Most Latin American countries with regularization programs have such laws at the national level (Clichevsky 2003). These laws are based on the principle of the “social function of property,” which means essentially that the uses of land in urban areas are subject to the collective interest or common good. At the local level, this same principle legitimizes the restrictions to land use through a city’s urban-planning guidelines, environmental regulations, historical preservation rules, and other regulations. However, in the case of regularization, the principle goes beyond the use of the land by its owner: it allows people who have occupied parcels of land for a certain period to acquire the right to live on them, sometimes conferring ownership rights. These laws vary from country to country, but the right to the land is generally offered to occupants who have lived on a plot for a period of five to ten years. Under these laws, governments issue different kinds of titles, ranging from leaselike documents (the right to occupy and even transfer this right to a certain parcel for a long period) to full ownership titles. In so doing, they also facilitate the transfer of public or private properties to needy families, a process that if done through the regular expropriation process, would be lengthy and expensive. Municipal involvement: Local governments play critical roles in regularization processes due to their having jurisdiction over urban planning, land use, subdivision, building, and related regulations. They have the power to make the necessary adjustments to their own regulations to accommodate the special characteristics of informal settlements within their boundaries. Moreover, local governments are the governmental level closest to the problem, which enables them to prioritize the areas to be regularized according to local urban development plans, coordinate ser vice provision to these areas, and work directly with beneficiaries. National governments are critically important to regularization efforts, as their legislation usually defi nes a country’s property rights. However, implementing the regularization initiatives is a people-intensive process that requires a significant amount of fieldwork and direct human contact. Local governments, with the help of specialized nongovernmental organizations, have proven to be the best authority for this task.

146

Public Policy Perspectives

A specialized technical staff: Support from trained personnel drawn from the legal, technical (engineering, urban planning), and social fields is essential to help beneficiaries complete the process for two purposes: to educate the occupants about the program and to assist them with the legal requirements of regularization. Beginning a regularization process involves obtaining the beneficiaries’ cooperation and engagement. This entails convincing them of the advantages of obtaining property titles and legalizing their tenure. Social workers usually perform this task. Many families are afraid of the costs incurred by legal ownership, such as property taxes and user fees for ser vices previously obtained irregularly. This engagement process can be difficult, since in many instances the economic advantages of the status quo are significant, particularly when the informal real estate market and the informal ser vices in the settlement are working relatively well. As regularization is fundamentally a process of transferring property rights among different parties, technical support for occupants also includes help in assembling the required documentation as specified by law and assisting individual occupants to navigate the complex procedures involved. Other support includes collecting the relevant information on the settlement (e.g., overall layout, plot dimensions, and construction). Special circuit courts and agreements with property registrars to facilitate the process of regularization: Even when legislation is in place allowing for expedited procedures for regularization, navigating the legal process is challenging, particularly for the beneficiaries. Regular courts are often unprepared to handle these par ticu lar cases or take too long to process them. Additionally, the cooperation of property registrars is essential both to inform on the characteristics of existing property owners and to register the new occupant’s rights once the process is complete. The establishment of special courts or designation of specialized judges to handle such cases, as well as agreements with property registrars, both of whom have to be educated about the procedures of the regularization process, are essential for its success. In addition to these preconditions, leaders of regularization programs consider a number of additional circumstances as they fashion their

Tenure Regularization in Latin America

147

approaches to any given informal settlement. Among these are the following. Urban regularization versus property regularization: Full regularization is a two-step process. The first step is to integrate legally an informal settlement into the fabric of the city by including it in the city cadaster and official maps, that is, the urban regularization. The other step is to offer titles to individual property owners. Programs usually achieve the first, which involves administrative steps that can be taken by the government alone, and then move on to the second, which involves a more complex legal process. In the first step, officials literally reverse the normal subdivision approval process: they survey and map the area, identify ownership (public and private) of the land within it, and name or rename existing streets. Th is requires topographic studies, drawing of subdivision plans, identification and numbering of individual lots, research into property registries, and other technical activities. Once all this information is available, the city can officially incorporate the subdivision in its land registries. The result enables residents to have formal addresses and receive regular city ser vices. Many regularization programs stop at this stage, since the subsequent steps toward individual titles are tedious, depend on the beneficiaries’ cooperation, and are conditioned by the type of land occupied (public or private). This process includes the proper identification of the former parcel owner (a private individual or a public entity), the application for a title for the lot by its current occupant along with the required paperwork, including verification of the length of residency, a court ruling, issuance of the title document, and the registration of the lot in the property registrar. The details of this process vary, depending on the legal status of the property and the characteristics of the enabling legislation. Individual titling is costly and time consuming: many local governments have neither the resources nor the interest in pursuing it on a large scale. Public versus private land: Regularization of properties on private land is more complicated than that of properties on public land. Many national laws and courts put forward the social use of property or common-good arguments for the transfer of ownership of public property to occupiers. However, given the legal difficulties in

148

Public Policy Perspectives

applying this argument to privately held property, governments more often resort either to expropriation or eminent domain procedures. Even when private property is subject to social use provisions, titling goes through a complex adjudication process to establish the occupant’s eligibility. Public land presents different problems. Many informal settlements occupy undesirable terrain subject to flooding, landslides, and other hazards. Under such conditions, a local government cannot regularize a settlement with these vulnerabilities but resorts to one of two alternatives: relocation of the occupants to safe sites or remediation of the sites to reduce the environmental risks. Either solution is expensive, time consuming, and fraught with political ramifications. Slum upgrading projects, which can remediate these obstacles, are feasible only when the costs of mitigating environmental risks are relatively low. Incentives to families: Occupants of illegal subdivisions have mixed reactions regarding property titling. Any reluctance or opposition presents an obstacle to regularization since residents’ involvement is a critical legal and political component of any program. In their view, titling presents advantages and disadvantages. On the positive side, a property title provides security of tenure and gives the occupant legal rights over its home, usually the most important asset a family may have. It allows the transfer of this property either through sales or inheritance. It is a powerful incentive to invest in its expansion and improvement, since the property can be passed on to siblings or sold. These features facilitate residential mobility, which is very important for people who have informal jobs. Families with titles do not have to be concerned about always being present on their property to prevent another person from occupying it. In essence, titles increase the value of properties and the wealth of poor families. On the negative side, titleholders have new responsibilities; they accrue property taxes and incur expenses for formal services. Poor families are afraid they will not be able to afford these costs and will lose their homes for nonpayment. A common and powerful concern, this fear accounts for the reluctance of many families to engage in a regularization program. These concerns about the costs of formality have to be weighed against the reality of most informal areas. Occupants are

Tenure Regularization in Latin America

149

already paying for services like water, electricity, telephone, bottled gas, cable TV, and even security. Often local illegal or criminal organizations charge fees that may be as expensive as and less reliable than formal service fees. Likewise, some households get electricity and water through illegal hookups. These connections are dangerous, unhealthy (water may be contaminated), of bad quality, and detrimental for home appliances (not to mention that they may be provided by outlaw groups that establish their own prices and threaten those who refuse to pay). Thus, in many instances the true cost of informal services may be higher than that of formal ones. Another reservation that residents have about formality is that informal real estate markets exist and function surprisingly well (see Chapter 1). Communities have devised procedures to transfer and register properties that would not hold up in court but that work just fine for them. Further, these informal titles are less costly than formal ones, therefore reducing any incentive to obtaining formal titles.

Examples of Regularization Programs Latin America has many examples of regularization initiatives. At least seventeen nations have active tenure-granting programs (Brown 2006), and most of the others have enacted some form of legislation facilitating the transfer of property or recognizing occupants’ property rights. These regularization programs range from the simple provision of titles for occupation to the more comprehensive integration of the settlement to the city and ownership titling. Some of the best known are in Peru, Colombia, and Brazil.

Peru

Peru exemplifies regularization that focuses exclusively on the provision of titles to occupants of informal settlements, but on a massive scale. The program dates from 1996 when under “Decree 424, Law for the Formalization of Informal Properties,” the Peruvian government initiated a nationwide property titling program to convert informal properties into secure land holdings by expeditiously issuing property titles. Residents residing on

150

Public Policy Perspectives

eligible public properties who could prove continuous occupation of a plot before 1995 (i.e., two years of occupation) received titles that allowed ownership of their parcels. A national agency, the Committee for the Formalization of Private Property, in charge of the program’s implementation, titled entire neighborhoods. With the support of a World Bank loan, it sent specialized teams to certify and identify eligible property and residences in the field (World Bank Development New Archives 2000). Altogether, more than 1.64 million lots were formalized, affecting approximately 6.3 million individuals (Field and Torero 2003). On average, the estimated cost of each title was inexpensive (US$50) (Brown 2006) and increased property values on average by 25 percent (Cantuarias and Delgado 2004).

Colombia

More recently, Colombia engaged in a similar titling-only project. Based on Law No. 1001 (2005), which also applied to urban public land illegally occupied by social housing, the government worked with 531 municipalities to title 340,000 properties, benefiting around 1,360,000 people. Colombia’s implementation of this program, similar to that of Peru, highlights several critical success factors. They include the importance of legislation designed to facilitate and accelerate mass regularization, the existence of close intergovernmental relationships that assist in implementation of titling processes, and the availability of local staff who are well-trained in legal and social issues (Inter-American Development Bank, 2013). By 2012, Colombia followed its successful experience on public land with the enactment of Law No. 1561 that established a similar program for private properties. Under this provision, occupants must reside on the land for more than three years, meet a maximum income requirement, and comply with some additional requirements. As yet not fully rolled out, this phase of the program will require the establishment of an executing agency in the Ministry of Housing and intense training for municipal staff and local judges.

Brazil

Under the City Statute (2001), Brazil has adopted a municipal-led approach that combines infrastructure upgrading with titling. This legislation defines

Tenure Regularization in Latin America

151

the “Special Social Interest Zones” (ZEIS is the Portuguese acronym) as areas within a city to be designated for regularization (Fernandes 2003). Typically, a designated area is on a good (nonvulnerable) site that has been occupied for long periods without contest from either its public or private owners. Cities can exempt a ZEIS from certain land-use and construction regulations, thus enabling the titling of places that otherwise would not have qualified. Next, depending on the ownership status of the land—public or private—the regularization process follows different paths. Regularizing public land involves the identification of the public agency that is the formal landowner, followed by the transfer of property to the agency in charge of the regularization and the subsequent concession of the right to live on, not own, the land to the current occupant. Private land regularization requires expropriation, a process that involves court proceedings that yield a “legitimacy of possession” document to the occupant.1 Since 2001, the national government has refined the federal laws to improve the program, but two key characteristics in the Brazilian model have remained constant. First, state and local governments implement the regularization process. Second, most regularization initiatives also involve basic infrastructure upgrading and social ser vices provisions. To date, the results of the Brazilian regularization programs record more success in upgrading than in titling. Rio de Janeiro, the birthplace of the term favela, illustrates the success of upgrading policy and the pitfalls of titling. Given the extent of its informal settlements (approximately a quarter of the population lives in favelas or illegal subdivisions), Rio has proactively adopted upgrading, not clearance, policies since the early 1970s for informal settlements located in environmentally safe areas. Its leaders have initiated major slum-upgrading programs like the Favela-Bairro (1996) and its successor, Morar Carioca (2010), with the financial support from multilateral organizations and the federal government (see Chapter 4). Rio’s model involves the full delivery of public goods, including installing or upgrading water, drainage, and sewer systems; improving street systems; adding street lighting and garbage collection; and creating parks, health and educational community facilities with child-care centers, community activities programs, and social ser vices referral centers. Rio also incorporates individual titling as an explicit goal of these programs. Government regularization initiatives also apply to another type of informality: irregular subdivisions located at the periphery of the city. While

152

Public Policy Perspectives

similarly as illegal as the favelas, they differ from them because by their regular street layouts and the availability of some basic infrastructure. Nonetheless, the regularization strategy is the same: undertaking title searches and supplying the missing infrastructure and ser vices as a precondition to legalizing the whole subdivision and titling individual occupants. Here, regularization is much simpler since many basic steps are already accomplished. What remains is completing the requirements and then securing the city’s formal approval in order to register the subdivision on the official map (or its equivalent). Once done, eligible individuals can apply for occupancy titles. For Rio’s favela residents, regularization certainly provides access to basic city ser vices, yielding a significant improvement in their quality of life. For a variety of reasons discussed above, fewer are beneficiaries of the titling component. For the residents, not having legal occupancy titles represents little inconvenience in their daily lives because an informal real estate market has emerged in Rio (see Chapter 4). This market functions in parallel to the formal one, with institutionalized procedures and quasilegal titling instruments. For a fee, neighborhood associations keep records of sales and issue informal property titles. So central is their role that even property registrars will accept informal titles issued by associations as proof of residency or occupation in regularization procedures (Scruggs and Acoca-Pidolle 2013). Recently, Rio’s informal real estate market has been undergoing a transformation. Increasingly, rental transactions surpass “purchases.” As of 2011, researchers in a multifavela study found 79 percent of the total transactions were for rental arrangements, a major increase from 2002’s 48  percent (Abramo 2012), as illustrated in Figure 9.2. Many attribute this trend to the relative maturity of the city’s informal real estate market, which is partially due to government upgrading policies that make residents feel more secure in their tenure. Those living in neighborhoods receiving these interventions have invested in their homes—making them larger, more durable, and, therefore, more valuable (Abramo 2012). As a result, favelas are becoming increasingly dense as residents add floors to existing structures. If they do not offer these new spaces to family members, they rent them for additional income. However, when and if titling programs follow upgrading, they will have to deal with the additional complexity posed by renters. Ethical questions arise: when people occupy (either themselves or their families) multiple properties, is it fair to help them if the property in question is not their primary home? Does the government incur responsibility for renters whose rent

Tenure Regularization in Latin America

48

2002

153

52 67

2006

33

71

2009

29 79

2011 0

10

20

30

40

Rent

21 50

60

70

80

90

Purchase

Figure 9.2. Percentage of real estate transactions, both rental and purchase, in a sample of favelas. Source: P. Abramo et al., “Relatório final—O impacto do Programa Favela-Bairro na valorização imobiliária e na mobilidade residencial nas favelas da cidade do Rio de Janeiro.” Observatório Imobiliário e de Políticas do Solo— OIPSOLO/IPPUR/UFRJ, Rio de Janeiro, 2012.

increases as a result of upgrading? Answering these questions invites differing policy responses from local governments. They may try to legislate limits to the rent increases or may ignore the rental situation. This area needs more research.

Conclusion In some Latin American countries, up to 70 percent of urban populations live in informal settlements and lack titles to their homes. The average number is around 30 percent. Regardless, these numbers capture the extent of the informal occupation of land and highlight the level of substandard living conditions experienced by residents in these areas. Consequently, most countries in the region have enacted some form of legislation to facilitate the regularization of properties. Although this legislation focuses on facilitating the legal process of titling, the policy true goal is to integrate informal settlements into the cities, legalize their existence, and extend to them the services available to the residents of the formal parts of the cities.

100

154

Public Policy Perspectives

Prerequisites for the success of regularization efforts are the existence of enabling legislation to justify regularization on the basis of making better use of urban land or the “social use of property,” local governments’ active participation in the process, and the use of multidisciplinary staff for technical tasks required for titling. While regularization is a complex and expensive endeavor, it offers concrete benefits—to its individual homeowners, who see the appreciation of their properties, and to the city as a whole, when it extends public ser vice coverage to previously lacking areas and incorporates new tax-paying areas that were previously marginalized. One key conclusion is worth emphasizing: regularization programs that include upgrading respond better to residents’ demands and are much more likely to succeed in achieving their policy goals than those simply focused just on titling. The Brazilian cases with integrated regularization programs, especially those implemented by the city of Rio de Janeiro, demonstrate that in the presence of a mature informal market that provides a relative security of tenure, the motivation and cooperation of residents in informal settlements to seek formal titles for the land they occupy is limited. Their real motivation is the infrastructure and ser vice improvements that a regularization effort may bring. New trends in some areas, particularly pronounced in Rio, may require evolving solutions. Efforts to formalize a renter-heavy market, for example, need to consider whether the owners or the occupants of a rented building are given ownership or some form of compensation or if the benefits of such policy should be extended to owners of multiple properties in the communities, among other issues. While informal settlements are widespread across Latin America, they are by no means homogeneous, and only by understanding their residents’ motivations, the functioning of the informal market, and other complexities of each circumstance can regularization efforts be effective in integrating informal Latin American settlements.

CHAP T ER 10

Making a Difference in the Predominantly Informal City David Gouverneur

Historical perspective on urban informality illuminates the limitations of certain brands of urban planning, design, and management in developing countries. Such perspective calls attention to the need for creative approaches to help steer the future of new informal settlements. While plans to improve living conditions in these settlements are important, they fall short due to the degree of consolidation of these self-constructed areas: the more consolidated these settlements are, the more difficult it is to introduce change, provide infrastructure, ser vices, open spaces, and relocate a percentage of the populations in order to introduce improvements. In the 1980s, recognizing that public social housing was limited in its ability to address the needs of the less affluent, an innovative program was tested that sought to take advantage of the capacity of the settlers to self-construct their dwellings; it was coined “site and ser vices.” This program worked preemptively to provide an urban framework, and ser vices for a great number of people to build their own homes. While this initiative proved successful at a neighborhood scale, it did not address issues of large-scale urbanization, nor did it consider such future problems as climate change, water scarcity, and food shortages. With predictions that twenty years from now the population living in new informal settlements will reach one billion people (according to the United Nations, DESA, Population Division 2005), urgent action is needed to respond proactively to this situation with innovative city planning and urban design strategies. This chapter presents an “informal armatures strategy,” an

156

Public Policy Perspectives

Figure 10.1. Informal settlements in Medellín, Colombia. Photo: David Maestres.

alternative approach, as an effective method of fostering sustainable urban growth in the cities of the developing world (Figure 10.1).

Historical Perspectives on Informal Settlements as a Predominant Form of Urbanization Informal settlements, self-constructed urban fabrics, are here to stay. Although official definitions may vary, informal settlements are essentially unplanned neighborhoods and residential areas constructed by their occupants initiated through the occupation of unser viced land.1 With their permanence, informal settlements will become the dominant feature of the urban landscape in most developing nations. Informal settlements are not a new phenomenon. Throughout history, migrants from rural areas have sought jobs, food, ser vices, amenities, or protection in cities, contributing to unplanned urban growth (Figures  10.2 and 10.3). Rapid, unplanned urban growth has often coincided with periods of economic prosperity as migrants are attracted by opportunities for

Figure 10.2. Barrio in Caracas, Venezuela. Photo: Oscar Grauer.

Figure 10.3. Town of La Vilella, El Priorato, Catalunya. Photo: David Gouverneur.

158

Public Policy Perspectives

employment and ser vices in the cities; migrations have also occurred during periods of violence and social upheavals in rural areas (Basudeb 2010: 19). The newcomers, who are socially and economically disadvantaged, try to occupy land as close as possible to the benefits of the formal city but usually end up in less desirable locations on the urban fringe. They settle on vacant, undesirable land that lacks basic ser vices and that is often vulnerable to such natural disasters as landslides, flooding, and earthquakes or such humanmade environmental damage as landfi lls, sewer discharges, or industrial emissions. Politics play an important role in the dynamics between the plannedformal city and the unplanned-informal one. Government officials tend to develop planning and design solutions for informal settlements only after the areas gain notice for fomenting social unrest, developing sanitary issues, or posing accessibility problems. Wealthier groups often view residents of informal settlements as undesirable citizens to be kept at a distance, frequently associating informal settlements with different lifestyles and values, unhealthy conditions, and violence. Despite these views, residents of the formal city often interact with informal settlement dwellers as they are an important component of the labor force and contribute to the economy of the better-off groups. Throughout history, efforts to sanitize and organize the informal city have arisen. For the most part, the designers of these projects aimed to protect the well-being of formal city dwellers through clearance of existing settlements or prevention of the emergence of new ones. For example, in the midnineteenth century, when Paris was industrializing and undergoing associated population increases (between 1831 and 1846 more than two hundred thousand people moved into the city), Napoleon III and his administrator, Georges-Eugène Haussmann, transformed Paris with initiatives to beautify the city, clean up the overcrowded lower-income neighborhoods subject to social agitation, improve transport connectivity across the city, and provide basic ser vices, including modern water and sewer systems, hygienic food markets, and parks (Fille 1991).2 Haussmann’s operations improved the performance of the city as a whole by introducing open spaces and large boulevards that, in turn, created new real-estate opportunities for the burgeoning middle and upper classes. However, his works displaced to the city’s fringes the poor living in self-constructed dwellings. Design solutions and plans for the formal city in nineteenthcentury France clearly did not tackle the needs of the less privileged.

The Predominantly Informal City

159

A different modality to address the pressures resulting from rural to urban migration arose in the United Kingdom, the Netherlands, Belgium, Germany, and some regions of northern Spain as they industrialized. These nations’ leaders tested many solutions to increase social housing or expand urban areas. They frequently located the housing near industrial employment and often visualized new urban models to cope with their cities’ rapid industrialization and population growth.3 Representative of this latter type of initiative is Ildefons Cerdà’s Eixample plan for Barcelona. It incorporated technical advances, such as streetcars, railways, gas lighting, and sewage collection and disposal systems, laid into a grid-street pattern accompanied by simple block design guidelines. Many of these efforts were an indication that the public sector and society at large were taking into account the needs of economically less well-off urbanites.4 Importantly, these initiatives may be considered the birth of contemporary city planning. During the first decades of the twentieth century, architects, led by Le Corbusier, founded the modernist movement that gained international reach through the organization of the Congrès International d’Architecture Moderne (CIAM) (Le Corbusier 1996: 336–44). They offered standardized planning tools that, in their view, would help the contemporary city respond to new functional demands and incorporate emerging technologies, and that could be applied worldwide without regard to context or culture. These technologies allowed, in theory, for more efficient use of urban land by emphasizing automobiles as a mobility solution and taller buildings served by elevators as a construction solution, thereby freeing land for open space (Curtis 1986). It resulted in the “towers in the park” model: development of superblocks with low lot coverage, few streets, and ample green areas. The modernist movement clearly sought to improve the performance of the city and set forward a social agenda intended to favor a more equitable form of urbanization that included the construction of large residential complexes for less affluent groups. With these design principles, advocates of the modernist movement rejected older cities as disorganized, congested, and dysfunctional. In so doing, they dismissed the premodern city, which was to a great extent informal, unplanned, and constructed by residents. They proposed to demolish entire areas of older cities, replacing them with newly constructed, single-use, middle- to high-rise buildings, and occasionally business or institutional districts.5 By the mid-twentieth century, these ideas flourished in both North and South America, abetted by the rise of the petroleum and automobile industries

160

Public Policy Perspectives

Figure 10.4. Superblock public housing built in the 1950s (center) engulfed by informal settlements, Caracas, Venezuela. Photo: Caracas Cenital. Source: Nicola Rocco/Colección Fundación para la Cultura Urbana.

and the construction of highways. With postwar reconstruction efforts, they also took root in Europe. On both continents, wealthier groups settled in the suburbs or in new peripheral districts while the less affluent remained in the center city, where entire sections were replaced by public housing designed according to modernist principles. In some Eu ropean and Latin American cities, the public sector also built large public housing projects at the urban fringe, thus contributing to sprawl (Howard 1902) (Figure 10.4). In the mid- to late twentieth century, as developing countries began urbanizing and industrializing, very large peripheral informal areas emerged in these nations. The rural migrants who fueled this growth lacked savings to acquire land, buy or rent housing units, or pay collateral to obtain mortgages, and therefore could not access the formal real estate housing market. Modernist designers of the formal city in these places had not taken informal settlements into account in their function-oriented planning

The Predominantly Informal City

161

model. Their plans did little to address widespread informal urbanization but did have a great influence on the development of the formal city.6 This new urban landscape, then, consisted of a residential urban periphery, whether of middle- and upper-income suburban areas or of lower-income informal settlements, dependent on the jobs and ser vices located in the older urban cores and, to a lesser degree, on a few areas of commercial activity in emerging subcenters. The presence of low-income informal areas at the fringe in developing countries contrasted with the changes that were occurring in industrialized nations, particularly in older North American cities, in which the urban poor were occupying the city cores as wealthier groups moved to the new suburbs. In developing countries, the informal peripheral settlers were forced to commute to the city centers for jobs and ser vices, traveling on inefficient public transportation systems and dedicating a high percentage of their time and limited financial resources to do so. This model exacerbated social fragmentation and social inequalities in terms of accessing employment, ser vices, and amenities. Furthermore, developing countries inherited the colonial legacy of land ownership concentrated in very few hands. Attempts at addressing the needs of the urban poor through conventional city planning often produced opposite effects. Wealthier groups embarked on a speculative urbanization process as rural land was converted to urban land. Meanwhile, the poor were forced to squat on land at the fringes of urban boundaries, frequently on sites considered unfit for human occupation. Consequently, despite the presence of city planning and social housing programs, new informal settlements continued to emerge and soon became the dominant urban form in the cities of the developing world. Authorities were not able to cope otherwise with the demand for shelter and suitable living conditions. In the twenty-first century, as informal areas continue to expand, they grow further away from the jobs, infrastructure, ser vices, and amenities concentrated in the formal city. The severity of the urban problems is magnified in very large informal agglomerations and particularly in distant peripheral locations. Living conditions in the newest settlements have become progressively more difficult, having negative effects on the performance of the entire city. Government authorities, academics, and professionals have been slow to respond to this situation. They have centered their efforts on the formal city and neglected the informal city. Municipalities assign their few financial and human resources to regulating the formal city’s real estate market, with plans

162

Public Policy Perspectives

and codes that are a holdover from CIAM ideals, copied or adopted from industrialized nations. Further, they have created permit processes meant to control urbanization, enforce safety, and foster better functional conditions that have, in reality, resulted in bureaucratic red tape that fuels corruption. Their reliance on conventional formal city development processes has limited impact, for these actions affect only a small, more privileged segment of the city. These problems are especially noteworthy in places where informal settlements dominate the urban space.

The Impact of Changing Attitudes Toward Informality As the informal city became the dominant form of urbanization in developing countries, attitudes toward informality began to change. The political class and the community at large started to pay attention to informal settlements, especially as their residents gained stronger political voices. In response, many developing countries, including Venezuela, Brazil, and Colombia, modified their laws to recognize informality as an integral component of urban development. They empowered governments to deliver projects aimed at improving the living conditions in informal settlements. Some of these experiences have been recently emulated on different continents, making them common practices as well as topics for academic research and examples to nurture professional practice. With attention to informal settlements growing, public decision makers began to design new institutional frameworks and models for their improvement, including technical guidelines and land registration and titling programs. For instance, in Venezuela, Ley Orgánica de Ordenación Urbanística—the Urban Planning Law—was enacted in 1987, which led to the creation of a nationwide inventory of informal settlements, followed by the first legal interventions in barrios in this country. Initially, these improvements were cosmetic or piecemeal, although later they were more comprehensive. During that same decade, authorities began offering informal settlers land and homeownership; the latter was usually the only option in contexts where the informal construction resulted in multistory structures that could not be associated with particular parcels of land. Some cities assigned cadastral numbers to the informal dwellings, which allowed authorities to charge for utilities and collect taxes. It is important to mention that residents of the settlements also are able to rent, exchange, or sell part of or their entire self-

The Predominantly Informal City

163

constructed homes through systems of informal real estate transactions.7 In many countries, providing land titles that formalize ownership is not considered a particularly relevant task since residents feel secure and not at risk of being displaced or losing their assets (see Chapters 4 and 6 in this volume). Some of the most successful results have been attained in Latin American cities since the 1980s, particularly in Brazil and Colombia, by implementing holistic informal settlement plans and projects, often using “corrective urban surgery,” a process of carving out open spaces in the dense urban fabric, improving accessibility, providing infrastructure, introducing community ser vices, and relocating dwellings from high-risk areas. These actions require community-shared plans in which the residents are fully informed and are in compliance with the proposals; partial replacement housing, preferably within the same district; and assurance to the displaced that their new homes will be better than what they are leaving behind. Technical plans such as these require a process of open engagement and negotiation with informal settlement dwellers. The following section covers in more detail some of these experiences, highlighting achievements and limitations. These examples provide important lessons for the informal armature approach that will be discussed below.

Venezuela

In 1994, when I was general director of city planning at the Ministerio del Desarrollo Urbano in Venezuela, where 90 percent of the population is urban, with at least half living in informal settlements, I commissioned the Plan for the Rehabilitation of Barrios of the Metropolitan Area of Caracas (Giménez Mercado, Gómez, and Rodríguez Vásquez 2008: 69–88). Enacted in 1996, this plan contained a framework for upgrading informal settlements. The plan offered important criteria on how to orga nize multilevel approaches to address informal settlements.8 First, it called for cities with very large informal areas to develop plans that could simultaneously address the metropolitan and local scales. Second, it noted that these initiatives required the participation of federal, regional, and local institutions. Third, it asserted the importance of forming ad hoc managerial platforms in which the community, from the earliest stages, could assume a leading role. These methodologies seemed a perfect fit for the government of Hugo Chávez, who was elected president in 1999 on a socially oriented agenda. In

164

Public Policy Perspectives

fact, in 2000, they became the basis for a national program, one that still guides improvement plans in Venezuela today. Under the program, in early stages, the government organized countrywide competitions to enlist crossdisciplinary teams. The requisite for their participation was to previously have taken short courses on methods for dealing with informal settlements. These courses, the results of the competitions, and the distribution of federal resources to begin implementing the projects created a new level of state-ofthe-art design and planning for informal settlements. This was a significant advance for Venezuela, which like many other countries had little practical experience working with informal settlements at institutional, academic, and professional levels. Unfortunately, Venezuela also offers an unhappy lesson about informal improvement plans, one that shows how the lack of political vision and commitment hinders intellectual and institutional efforts. First, despite having more abundant public resources derived from the national oil industry than most developing countries, top-down interventions for informal settlements drew scarce community participation. Second, the interventions lacked the necessary political attention and continuity necessary for the complexity of the situation. Third, a persistent bias toward highly subsidized housing programs that only meet a fraction of the demand has drained resources and concentrated already limited managerial skills, hindering the informal settlement improvement initiatives. Consequently, the Venezuelan projects have had a limited impact on informal settlements in comparison to the Brazilian and Colombian examples described below.

Brazil

In Rio de Janeiro (population: eight million), the Favela-Bairro project, undertaken by Mayor Cesar Maia with the technical support of Flavio Ferreira, demonstrates the importance of three critical success factors for improving informal settlements: sustained political commitment, key physical interventions, and appropriate management. Developed in 1995 under the technical coordination of Jorge Mario Jáuregui, an Argentine architect, the project prioritized two objectives: quality-of-life improvements and connectivity with the formal city. The program targeted some of the most challenged favela communities, particularly those in close proximity to formal areas of the city. While some of them registered very high indicators of violence and lacked

The Predominantly Informal City

165

basic community ser vices, those were relatively small and spatially contained in comparison with the large continuous informal agglomeration at the northern fringe of Rio. The program focused on improving pedestrian connectivity and basic infrastructure, and removing homes constructed at the edge of highly polluted ravines. It also created small communal spaces within the tight informal fabric and paid special attention to the design of community ser vices and relocation housing. The Favela-Bairro plan, among Latin America’s first comprehensive projects to be implemented with concrete results, gained widespread attention in Brazil and in the international community. It demonstrated the impact of physical design on the welfare of marginalized communities. In fact, some improved communities organized tours of their neighborhoods, attracting visitors and earning economic benefits. The program lost its vigor when Mayor Maia left office in 2008. Drugrelated violence in many informal settlements and in the city in general surged. However, the experience paved the way for similar initiatives in other countries, particularly in Colombia, which crafted what is now a cutting-edge example. Meanwhile, Rio de Janeiro renewed its focus on informal settlements in preparation for hosting the World Cup (2014) and Olympic Games (2016). At this point, the city leaders are mainly preoccupied with reducing crime and violence that could lower the attendance of international crowds. To this end, the city leaders deployed a program called UPP (Unidades de Polícias Pacificadora), or Police Pacification Units, that relies heavily on military and special police organizations seizing control and occupying the most violent, drug-infested informal neighborhoods. The program is highly controversial. Supporters believe that, on the one hand, there are those who feel that as result of “pacification,” crime rates have gone down and governance has been restored: many residents of informal settlements share this opinion. Opponents feel that the program is repressive and ineffective and lacks coordination among different agencies, and that over time the police units have committed abuses and have engaged in the drug trafficking. Still others see it only as a temporary fi x, fearing that the repressed violence will reemerge after the sporting events are over.9 Residents in some pacified neighborhoods are offering low-cost room and board for tourists who are attending the games. Nonetheless, in an effort to consolidate and build on the drop in crime, in recent years, local authorities have also made some new physical interventions—such as the construction of elevators and aerial gondolas, following the examples advanced years earlier in Colombia,

166

Public Policy Perspectives

including large peripheral ones. Here again there have been detractors who criticize the sole focus on the transportation devices, the lack of public spaces, and the misunderstanding of the benefits of holistic interventions. The lack of continuity of Venezuela’s and Rio’s informal settlement improvement plans and projects offer many important lessons that can be contrasted with the case studies that follow.

Colombia

The Colombian examples demonstrate the positive effects of sustained political commitment as a critical component to improving informal settlements. Here programs took place against the backdrop of a five-decade struggle against extreme violence. The 1948 assassination of the popular presidential candidate Jorge Eliécer Gaitán and the emergence of a guerrilla insurgency marked the beginning of a long period of political instability, largely played out in the rural areas. At the peak of the violence, the Colombian government had lost control of a significant portion of its territory to guerrilla and paramilitary groups, both of which were involved in drug trafficking. The rise of the narcotic trade exacerbated the situation as the country by the 1980s became the epicenter of cocaine production and distribution. Seeking safety from this turbulence, millions fled to the cities, finding shelter in informal settlements. But high drug-related crime rates also affected life within informal areas and throughout the cities.10 After the loss of half a million citizens and ostracism from the international community, the Colombian government forged an agreement with the United States to provide military and financial support in order to disrupt drug chains (Livingstone 2004). These efforts gradually paid off, and the government regained control over the country. A new, highly educated leadership began to occupy federal, regional, and municipal positions. Notably, these changes first took place at a national level and later spread to localities facilitating the work of committed and talented mayors. Key to this success was the introduction of important legal reforms that empowered mayors to produce urban plans and ease bureaucratic procedures. Carried out by successive, proactive municipal administrations over the past two decades, the most significant cases of urban transformation occurred in Bogotá, Colombia’s capital city, and Medellín, the nation’s industrial

The Predominantly Informal City

167

powerhouse. These changes occurred somewhat later than the interventions in Caracas or in Rio de Janeiro discussed before. In Bogotá, a city of nine million, some mayors introduced important institutional reforms, making the administration highly efficient and significantly increasing tax collection while other mayors managed to get Bogotanos out on the streets, allowing different social groups to interact and enjoy leisure activities in a city where this was uncommon.11 Of note is Enrique Peñalosa, mayor from 1998 to 2001, who channeled heavy investments for physical interventions into the city. Aiming to reduce the disparities between the formal and the informal city, Peñalosa employed high-quality design and performance standards to improve basic infrastructure (including open space, parks, public transportation, and pedestrian and bicycle mobility systems) and community ser vices and educational facilities. His key contributions were the Transmilenio Bus Rapid Transit (BRT) network, made possible by redesigning roadways along major city arteries, the Biblioteca-Parques (Library-Parks), and a system of elementary and high schools. Dozens of miles of newly enlarged sidewalks and bike lanes accompanied the Transmilenio BRT project. The Biblioteca-Parques projects became cutting-edge libraries with ample recreational spaces. Many schools, operated under public-private partnerships, were built in the heart of informal settlements. These interventions, along with new metropolitan parks, had a profound impact on the city: they radically changed the way Bogotá operated and how it was perceived locally and globally. Accompanied by improved national and urban security and environmental conditions, they helped attract new local and foreign investment, allowed growth of local and global fi rms, and expanded employment opportunities, thereby repositioning Bogotá as one of Latin America’s leading cities. Another consequence of the enlarged job market, enhanced ser vices, and new amenities was an increase in the city’s population (Bocarejo and Tafur 2013). In the fi lm Urbanized (Hustwit 2011), Peñalosa passionately talks about the transformation of Bogotá under his mandate. He stresses the importance of introducing new urban paradigms that reduce disparities between the formal and the informal city and assist the urban poor, who constitute a high percentage of the population in his city and, indeed, in the cities of most developing countries. Bogotá’s success influenced other major Colombian cities, especially Medellín, along with other cities in South America. Despite these achievements after Peñaloza left office, the municipal administrations

168

Public Policy Perspectives

that followed lost grip on some of his strategic urban projects and programs. His top-down managerial style fostered neither communal participation nor strong team work, which also explains lack of continuity of his visionary projects for the transformation of Bogotá. On the contrary, the Medellín case study depicted below can be considered a success story in terms of sustainable urban change. Medellín, a city of two-and-a-half million people, has gained worldwide recognition for experiencing the most significant urban transformation in Latin America in the last decade. During the 1980s, Medellín was the most violent city on the planet, ranking number one in violent deaths per inhabitant. Under drug kingpin Pablo Escobar, the Medellín Cartel controlled the city that was the headquarters of his narcotics organizations (Vulliamy 2013). In 2003, Sergio Fajardo, a mathematics professor who had run on an independent platform with an agenda based on curtailing violence and corruption, won the mayoralty. Fajardo, who is currently governor of Antioquia, Medellín’s home department, transformed the city significantly in his four-year term. His administration combined physical interventions with managerial expertise and performance standards. It targeted Medellín’s poorest and most embattled informal neighborhoods for improvement.12 Among the first interventions was the construction of Medellín’s gondola public transportation system, the Metrocable, to connect Santo Domingo, one of the city’s most notorious upland informal settlements to the main city corridor. Although this transportation system was conceived during the previous administration, Fajardo and his political and technical teams sought the opportunity to use it as the anchor for the holistic transformation of this challenged neighborhood. This novel transportation system was accompanied by the construction of a striking public library: the Biblioteca España, open spaces, and amphitheater for cultural programming and recreational events. The plan also included a manufacturing incubator adjacent to one of the open spaces and upgraded nearby existing educational facilities. It removed the high walls that once surrounded local schools to integrate the facilities visually and functionally into the new open spaces, built pedestrian bridges to connect neighborhoods previously separated by ravines, and placed pocket parks adjacent to the pedestrian bridges. The bridges, constructed at the same elevation as the Metrocable stations, not only allowed nearby residents to safely and quickly access transportation but also knit together a broad community formerly divided under the control of different drug gangs.

The Predominantly Informal City

169

Further, the administration removed dwellings located in the high-risk gorges of the ravines, replacing them with new substitute housing in the same districts, allowing the relocated residents to retain their social ties with their communities. And it built new sewer lines in the gorges that collected the wastewater polluting the streams and bordered them with pedestrian promenades. Thus, Fajardo and his administration transformed the once neglected and unsafe gorges, which were the least desirable areas of settlement, into amicable public spaces and water management devices. While these improvements occurred, owners of the dwellings closest to the Metrocable stops expanded and upgraded them to incorporate rental units, shops, and restaurants, making the stations busy retail hubs. Fajardo repeated many of the strategies tested in Barrio Santo Domingo in other informal settlements around the city. Over time, the Fajardo administration developed holistic plans, Proyectos Urbanos Integrales (Integrated Urban Plans, or PUIs) that stemmed from the initial carefully orchestrated acupunctural interventions, allowing for gradual development that constantly created added value. The administration introduced major changes in areas at the junction between informal settlements and the formal city and, later, within the formal more commercial districts and residential areas. The city’s development plans, acting in informal and formal areas alike, wove them together. Eventually, a second Metrocable was constructed at the terminus of the Santo Domingo station to access the Parque Arvi, a large natural reserve and recreational area that has become one of the favorite leisure spaces in a city with few parks. The succeeding administrations continued Fajardo’s policies, thus multiplying access to urban benefits. This continuity contrasts positively with the performance of Venezuelan cities, particularly in their informal areas, or the reverses of some achievements in Bogotá since Peñalosa stepped down as mayor. Fajardo’s visionary leadership was critical to the success of these interventions. He attracted talented designers and managers and inspired them to realize that they had a unique opportunity to demonstrate change. He also made them aware that they had to deliver on their promises to gain credibility among the urban poor who had been repeatedly frustrated by many unfulfi lled expectations, deeply rooted corruption, mismanagement, and violence. Medellín offers lessons about the importance of immediate action joined with strategic planning. It shows that the public sector must be nimble,

170

Public Policy Perspectives

responding at the same pace as informality proliferates, reinventing programs, simplifying red tape, and selecting operations that will yield the greatest impact. Colombia’s decision to prioritize the design of world-class public libraries for the poorest and most violent informal settlements highlights this important lesson. Today, the aerial gondola ascending against the rugged terrain of the Barrio Santo Domingo provides a striking image, and it, along with the iconic Biblioteca España in the background, has become an emblem of the transformation that occurred in this once challenged and isolated Andean city. The city and the institutions, design firms, and individuals have earned countless national and international awards for their contributions to the city’s environmental, urban, and social transformation.13 The sense of urgency, efficiency, commitment, and community outreach in Bogotá and Medellín offers important points of comparison with city planning in Venezuela. The Venezuelan Ministerio del Desarrollo Urbano, a bureaucratic federal agency, assisted in the elaboration of rather conventional urban plans. Developed by private firms, these plans often took years to be completed. The approval processes involved both the federal and the local governments. Local councils often did not even understand the value and technical implications of the planning instruments, and, by the time the plans were enacted, the cities had already undergone accelerated urban growth or the administration that originally requested them had been replaced. Even the detailed technical considerations of the Plan for the Rehabilitation of Barrios of the Metropolitan Area of Caracas, while certainly aimed at improving the poorer neighborhoods where close to 1.4 million inhabitants lived, did not allow for immediate action. Although produced with professional rigor, the plan was too abstract and, at the same time, too intricate, to be handled solely by the federal government. The plan required additional refinement, coupled with years of community engagement, to carry out its directives and yield any significant changes. Thus, city-planning instruments in Venezuela had limited effect on overall urban conditions and almost no effect on the poorer areas. They lacked political support, were hampered by public officials’ ignorance of the overall urban process, and had much too complex design and managerial requirements for local government and community participation. These conditions greatly hindered the implementation of the plan and similar initiatives in many other Venezuelan cities.

The Predominantly Informal City

171

These different examples illustrate that high-quality design and management, along with proactive political leadership and community involvement, are the best tools for improving the conditions of informal settlements and the city overall. There are important lessons that can be learned from both planned and self-constructed modes of urban development. Both modes of city making must be brought together conceptually and spatially without eroding the conditions that make them unique. The first step in accomplishing these objectives is to change the overall attitude about informal settlements, acknowledging that the self-constructed city is a valid form of city building, especially in many developing countries where informality is the dominant urban form. If properly guided, informal settlement can become an efficient means to shape better cities in the developing world.

Looking into the Future: The Informal Armatures Approach As demonstrated in the cases of Brazil and Colombia, it is possible to ameliorate living conditions significantly in informal settlements provided that city planners, working hand in hand with communities, have the design and managerial capabilities to develop and deliver holistic improvement plans.14 However, the more consolidated the settlements, the greater the challenge to introduce change. This is due to the technical intricacies of intervening in long-established, dense urban tissue and the necessity of relocating residents to undertake any intervention. There is also a limit to what can be achieved in improving these types of informal settlements. The populations of these settlements may surpass half a million inhabitants and, in some cases, may even reach several million. As such, they are large and complex urban agglomerations, but they are incomplete cities as their residents must commute long distances to access metropolitan ser vices found only in the formal city, such as better-paying jobs, hospitals, technical schools and universities, large markets, shopping centers, government offices, and major sport and cultural venues. For these large agglomerations, informal improvement plans can add valuable improvements at a local level, but they are not able to address broad urban demands, since the spatial requirements to provide these ser vices would disrupt too large a portion of these settlements’ populations. This raises

172

Public Policy Perspectives

important questions about how best to steer the development of new informal settlements. Considering such limitations and the projected increase in population of informal settlements of close to two billion people in the next two decades, planning preemptively, in contrast to the reactive approach of corrective urban surgery, is imperative. How can cities plan ahead and help transform the new settlements? How can cities foster the evolution of the predominantly informal city so that the living conditions and landscapes within them are competitive with the formal city? A possible answer, which I believe deserves testing and further research, is the informal armature approach. Its precedent can be traced to the site and ser vices programs, which were first tested in the 1980s.15 These programs selected appropriate sites and offered an urban framework that included infrastructure, lots on which residents could self-construct their homes, and spaces where, in the future, community ser vices would be provided (Van der Linden 1986: 10). Similarly, the informal armatures approach calls for the selection and servicing of appropriate sites before occupation occurs, accompanying the evolution of the settlements until they achieve more complex levels of development and become components of greater urbanized territories. Once the framework is in place, residents can begin to self-construct their dwellings. They also are expected to participate proactively in the gradual transformation of the district. In unplanned informal settlements, individual families build their homes, if they do so, through communal efforts. In the best of cases, they are able to provide small communal facilities, such as playgrounds or sport courts. In the informal armatures approach, the facilitators of the program work hand in hand with the settlers on a variety of fronts, which could include recycling to provide construction materials and technical assistance in the construction of the original housing shells as well as for their expansion; water management and urban agriculture programs; the inclusion of manufacturing incubators; the creation, maintenance, and programming of communal spaces; and the transformation of these initial community ser vices into other uses as the settlements evolve. The informal armatures approach allows planners and officials to do the following. a. Project land requirements and assemble it in time to meet the demand of informal growth.

The Predominantly Informal City

173

b. Envision a spatial orga nization that can utilize existing landscape features. c. Foresee a balanced network of uses and components that in time will make the new informal settlements complete urban systems as opposed to incomplete entities totally dependent of the formal city. d. Predefi ne the public realm, which will support areas of urban infi ll, whether for self-constructed dwellings or for a diversity of productive uses and ser vices on a local and a metropolitan scale. e. Spur the process of occupation by providing the necessary conditions in the early phases of the settlements, gradually incorporating new uses, infrastructure, ser vices, amenities, and spatial conditions as the settlements mature and become part of complex urban systems and broader urban scenarios. f. Consider the mechanisms to secure spatial requirements during the different phases of the settlement’s evolution. While these are defined and held vacant until needed by zoning in the formal city, in the informal context, new settlers promptly occupy the spaces, thereby losing the opportunity to attain balanced urban growth patterns. The informal armatures approach provides ways of securing these spaces from unwanted occupation, offering transitory uses that are meaningful to the community in order to ensure the protection of these sites as common assets. g. Address pressing issues in contemporary urbanization that go hand in hand with sustainable urbanization processes, including climate change, water scarcity, food shortages, alternative modes of economic production, community participation and governance, recycling, and conservation of biodiversity, just to mention a few. These aspects were not on the agenda at the time the site and ser vices emerged and are more difficult to address through informal settlement improvement plans. The informal armatures approach offers conditions that self-constructed settlements cannot achieve on their own and combines them with the dynamism and the transformative nature of the processes of informal urbanization. It encompasses physical and nonphysical aspects of urban design, where planning and design engage with the logics of informality (Figure 10.5).

174

Public Policy Perspectives

Figure 10.5. Informal armatures proposal by David Gouverneur. Graphic: David Gouverneur, Trevor Lee, Autumn Visconti, and David Maestres.

The informal armatures approach will have a chance to succeed if urban actors clearly acknowledge that the self-constructed city is not a marginal phenomenon. Steering its growth can be the most effective way of fostering sustainable urbanization in the developing world. One of the main conditions necessary to move in this direction is for the public sector to secure public land to implement the program. The mechanism of doing so will vary depending on the context. For instance, there are nations that do have public land adjacent to or within urban areas, but this land is given inadequate use, such as the presence of military grounds that existed before the cities engulfed them. Others have legal instruments to embark in proactive land banking to acquire land in favorable locations. Some countries are more

The Predominantly Informal City

175

agile in fostering joint ventures with the private sector to gain access to land for public purposes in exchange for granting the landowners zoning benefits or investing in infrastructure and ser vices that create added value for the land remaining in private hands. In all cases, the goal is to give this task high priority. Doing so will help steer the new settlements onto appropriate sites, reducing the exclusionary speculative real estate mechanism of conventional planning.16 These initiatives should be promptly tested in pilot projects to demonstrate the applicability and the validity of their principles and suggested design strategies. Through practical experiences, important feedback will help refine and adjust informal settlement improvements programs, as well as spur additional research. Informal urbanization will be the dominant force shaping the imminent future of the cities in the developing world. Therefore, the growing size of informal cities and the percentage of the global population that will live in them point to the urgent need for envisioning new modes of urban planning and design. Now is the time to think and act.

This page intentionally left blank

C H A P T E R   11

Informal Land Markets: Perspectives for Policy Bish Sanyal

To propose a policy perspective on any issue, one must begin with a historical awareness of how such issues have been addressed in the past. Th is is particularly important in prescribing policies for urban informal real estate markets because the characteristics of such markets are still not fully understood, even after fi ft y years of policy interventions to enhance their effectiveness. Lacking a clear definition of how informal markets operate and connect to the larger urban economy, past efforts to influence the functioning of such markets have been based primarily on “Learning by Doing,” the title of the World Bank’s first serious study on the topic (Cohen, Madavo, and Dunkerley 1983). Indeed, much has been learned since that publication, thanks to the research undertaken by many scholars,1 including the authors of the chapters in this volume. It is beyond the scope of my concluding remarks to summarize all such insights. Hence, what follows are a few key lessons learned by academics and practitioners—lessons that illuminate the critical issues raised by the authors of this volume. These comments are in three parts. The first part provides a brief synopsis of how policy makers viewed informal settlements at the time of the World Bank’s study. This historical view is necessary to illustrate how the understanding of such settlements has evolved to the point where they are now referred to as “informal real estate markets.” The second part is a brief analysis of three key policy interventions, among a much larger set of policies, designed to improve the functioning of informal real estate markets. The

178

Public Policy Perspectives

purpose is to learn from such interventions whether policy makers and their advisers need to revise their assumptions about the key actors (notably the poor) who transact in informal real estate markets as well as to learn what explains varying policy impacts and the kind of organizational constraints that affect policy implementation. The third part concludes by proposing three research questions that need to be addressed to better intervene in informal real estate markets. These comments draw on the chapters in this volume that provide empirical evidence from Brazil, India, and China—three relatively large developing nations that nevertheless demonstrate significantly different spatial patterns and political-economic systems. Needless to say, such varied examples do not lend themselves to broadly generalizable comments about urban informal real estate markets in all developing nations; what they do provide are lessons about how important it is to understand the specific institutional contexts within which public policies are formulated.

Who Transacts in Urban Real Estate Markets: The Conventional View At the time the World Bank’s report was published, the dominant view was that the urban poor who lived in informal settlements were rational actors who created such settlements as a rational response to both market and state failures to supply housing for their needs.2 This notion—that the rational poor were innovating cheap and flexible solutions to meet their basic needs—was in sharp contrast to an earlier view—that the urban poor were “peasants in the cities,” new immigrants, mostly unemployed, who lacked the modern aspirations of working-class families (Roberts 1973). John Turner’s research (1976) was very influential in altering the negative views of the urban poor and of informal settlements. He argued that neither the urban poor nor the settlements where they lived were problems. Rather, he posited that the poor were innovating solutions for their housing needs and hence must be supported by governments—which until then had produced so little housing with so many resources, while the poor had produced so much with so little (Turner 1979). This new view also blamed the formal housing market for not responding to the needs of the poor due to its dependence on one key factor: namely, the rate of return on capital investment. This profit motive thus discouraged construction of houses that the poor could afford to buy. In general,

Informal Land Markets and Policy

179

the housing standards followed by both the government and the formal private market were too high, Turner argued; that is why the poor had created their own standards to build incrementally and consolidate housing that realistically fit their meager budgets and provided relatively safe housing. This was a radical departure from conventional thinking about who resided in informal settlements as well as why, and whether these areas were likely to further degenerate due to increased density, crime, and steady degradation of the living environment over which government had very little control. In the conventional view, the poor and the unauthorized settlements where they lived were a negation, not an affirmation, of the rationality necessary for modernization of the city and the nation. Some considered the poor who purchased plots in informal areas as fools who were swindled into verbal contracts by a few greedy, illegal land subdividers who worked closely with “political thugs” to occupy land illegally and then sell it informally at relatively high prices considering the low quality of the land and lack of legal titles. The term “informal real estate markets” was not used by anyone then; the settlements were referred to as “blighted areas” as in the otherwise modern city. Many considered such blighted areas as illegal territories breeding social problems and threatening the “public interest” (Woodbury 1953). Consequently, large-scale clearing of such areas and discouraging rural-urban migration were prevalent policies before Turner radically recast the scenario. A key component of this radical new view was that transactions that appeared at first glance to be illegal or informal were, in fact, guided by rules and symbolism borrowed from formal transactions. As Perlman explains in Chapter 4, such transactions opened up access to land ownership by the poor, but, as she cautions, they are not cost-free, either economically or politically, and are managed by resident community groups. Perlman’s analysis is more political than Turner’s because in Turner’s view (which shaped the World Bank’s policies), “the community” was portrayed as civil society, uninfluenced by either the market or the state. In Turner’s description, the problem of collective action does not exist. He recommended minimal state intervention, urging that slum clearance be stopped and that governments provide infrastructures and ser vices incrementally while the poor consolidate their housing, also incrementally. The stress on incremental building, in contrast to fully built high-standard housing, was a pragmatic strategy for both the government and the poor since neither had the resources necessary for highstandard building construction. Yet some were concerned that the poor periodically had to borrow money for projects because of their fluctuating and

180

Public Policy Perspectives

unpredictable incomes, as well as that “loan sharks” operating in these informal settlements took advantage of the poor (Adams and Fitchett 1992). Hence, when the World Bank initiated the upgrading of informal settlements, it offered some project funding for loans to the poor at concessionary interest rates—ones lower than the rates changed by informal money lenders yet high enough to create a fiscally sustainable mechanism for gradually expanding the number of loan beneficiaries (Keare and Jimenez 1983). By then, the Grameen Bank in Bangladesh had demonstrated convincingly that the poor do repay loans when they are managed and monitored well by organizations, such as Grameen, which operate differently from formal banks, both private and public (Yunus 1999). Again, the emphasis was on community-based organizations, led by nongovernmental groups that were assumed to be neither interested in profit, unlike market agents, nor in social and political control, as was the ultimate intention of the state. This celebration of “the community” over the market and the state did not totally dismiss the idea that the poor were market savvy and politically astute; however, it did not explicitly emphasize these elements either, even though (as the authors in this volume— Chattaraj and Mukhija, for example—describe) market and political opportunities deeply affect the motivations of residents of such settlements.

Learning from Three Policies Since the World Bank’s report (1975), governments in Asia, Africa, and Latin America have implemented a range of policies to integrate informal settlements—spatially, economically, and politically—in the overall management of cities (Angel and Mayo 1993). The exact form of policy interventions— and, more important, the real motivations underlying them—varies widely. For example, architects and urban designers continue to rely upon design to improve the physical qualities of settlement areas where the poor live (Seelig 1978). True, many discredited design for a while as ineffective (Roweis 1981), but lately it has returned as one form of intervention along with others to upgrade informal areas, as Gouverneur describes in Chapter 10 of this volume. Master planning of the kind that produces beautiful maps yet ignores the reality of informal settlements is still common, however—even though its power to convince policy makers has declined significantly (UNHCR 2010). In situ upgrading, pursued first in 1972 by the World Bank in Dakar, Senegal, remains a viable strategy. Even though upgrading has not been replicated

Informal Land Markets and Policy

181

widely for various reasons (Gulyani and Connors 2002), its attractiveness as an option has strengthened with increasing resistance to relocation from inhabitants of informal settlements. The World Bank’s recommendation to provide ser viced plots (site and ser vice schemes) as a complementary strategy to upgrading, however, lost popularity by the early 1980s because as the World Bank itself argued, site and ser vice schemes required large subsidies and hence were not sustainable (Cohen, Madavo, and Dunkerley 1983). Instead, the World Bank recommended that policy makers focus on making the entire urban economy function better as interconnected housing “submarkets,” with good urban management practices (UN-Habitat 2005). The new focus moved away from specific projects toward better urban management practices overall. This change of emphasis increased support for large-scale land regularization and granting of private property titles to households. Initially, such policies did not appear justified in market terminology; however, as Turner and others (Burns and Grebler 1977) argued, regularization of informal areas and tenure security were necessary to create communities in which the poor could incrementally invest in housing consolidation. No one at that time advocated tenuring as a way to create well-functioning land markets, however. On the contrary, legalization opponents argued then that if the poor were given land tenure, they would sell their properties for higher prices and move back to another slum. As is well known, in the 1980s the policy shifted away from in situ upgrading and provision of ser viced plots (site and ser vice schemes) toward “urban management,” which led to a more holistic approach. Decision makers moved from piecemeal projects toward such overarching public policies as property-tax reform, privatization of public utilities, and other forms of private-public partnerships to create better functioning markets for land, housing, commercial spaces and so on (Ayres 1984). Slum rehabilitation and slum redevelopment—two policies referred to by Mukhija in Chapter  8—emerged at the tail end of the well-intentioned but difficult-toimplement reforms that “urban management” advocates proposed. As public policies, both slum rehabilitation and redevelopment acknowledged explicitly that market forces influenced the functioning of informal settlements. Nevertheless, this approach similarly relied on the notion of “community” in devising solutions that could be politically acceptable to the poor. The World Bank had documented this turn in public policies in 1953. Nonetheless, it is worthwhile, for the purpose of this review, to draw attention to one

182

Public Policy Perspectives

factor that greatly influenced public policies—particularly in democratic societies—namely, the political mobilization of the urban poor, whose numbers continue to increase and whose resistance to conventional public policies has been channeled quite effectively by many nongovernmental organizations (NGOs) worldwide. In other words, as one thinks about the changing nature of informal settlements, one might as well think about the changing nature of “ideas in good currency,” to borrow Donald Schon’s phrase (1987). Through the last forty years, it is not only policy advisers and planners who have changed their approach to urban informal settlements; political pressure from below has also influenced policy. More and more urban poor have become astute in working with both market agents and political actors in getting better deals for themselves (Mukhija 2003). This scenario provides a backdrop to discuss three popular policies that highlight “the surprises” that have emerged from efforts to implement these policies.

Why Isn’t In Situ Upgrading Widely Replicated?

While multiple scholars and the World Bank have assessed in situ upgrading projects, no consensus exists as to why such a relatively low-cost option could not be broadly replicated in any city (Gulyani and Connors 2002). True, piecemeal efforts continue here and there. However, such efforts have not proved as attractive to public authorities as, say, slum redevelopment schemes—particularly, if public authorities can use such plans to generate new revenue. Privatization of public utilities and the private provision of public infrastructure—two trends that emerged in the 1980s—also diverted attention away from slum upgrading as an economically attractive strategy (Sanyal 1986). Additionally, as the pace of upgrading slowed, areas that had been upgraded initially did not flourish as expected. On the contrary, many upgraded areas deteriorated steadily without adequate maintenance (Werlin 1999). This is not to say that all housing improvements in upgraded areas totally stopped; they continued in a haphazard way, sometimes endangering the lives of area residents who, surprisingly, asked for government intervention to halt the steady deterioration (Sanyal and Fawaz 2007). What happened to the community resource management—a practice so forcefully advocated by Elinor Ostrom (2000) as an alternative to both state and market intervention? One answer lies in the fact that community groups

Informal Land Markets and Policy

183

do exist, as documented by the authors of this volume, but they do not operate independently, beyond the reach of politically and economically powerful actors. As a result, while a few communities occasionally manage to get some public resources for improving the infrastructure in their areas, rarely is work done at the pace necessary to meet the regular maintenance needs of such increasingly dense population areas. What other lessons does the upgrading experience offer? First, without a growing urban economy and better employment opportunities, upgrading by itself cannot create livable communities for the urban poor. At one level, this is obvious; more important, understanding the limits of upgrading tempers the romanticization of “informal entrepreneurial economies” within low-income settlements. Second, cost recovery for upgrading has been very difficult to obtain—even though the Grameen Bank has demonstrated clearly that poor households do save and repay loans. The clue to that puzzle is the organizational elements of how building loans are distributed and why payments for monthly ser vices are or are not collected (Sanyal 1987). To replicate the Grameen model for loan delivery and recollection is extremely hard—if not impossible—in the provision of public infrastructure (Watson 2007). Third, when the World Bank initiated upgrading, institutions that bypassed local governments emerged in an effort to demonstrate that a new approach to housing the urban poor required new organizations and strategies—ones not tied to the old discredited ways pursued by city councils. These newly created institutions did not demonstrate, however, that they were sustainable. When the upgrading projects ended, these “innovative institutions” were folded into old ones, such as city councils or other local agencies that received financial support from higher authorities (Morss 1984).

Private Property Rights and Housing Supply

Hernando de Soto (2000) was not the first person to advocate that residents of informal settlement areas be offered private property rights. Starting with Turner and spanning both sides of the entire ideological spectrum, many before de Soto had proposed that informal areas be formalized and land titles be provided to residents (Moser 1989). The argument was that this approach would benefit not only individual homeowners in newly formalized areas but also the city as a whole. Among those on the left, Andre Gunder Frank (1969) forcefully supported this policy, even though he and others were skeptical

184

Public Policy Perspectives

whether any “capitalist state” would ever provide blanket legalization of all informal properties (Burgess 1992). They argued that, at best, select individuals and areas, not all of the urban poor, would likely be coopted through selective schemes that would result in breaking the social solidarity among the urban poor. On the right, too, there was some initial opposition to granting tenure to those who had obtained land illegally. These opponents were concerned that this sort of general amnesty would send the wrong social signal, ultimately encouraging more rural-urban migration and creating a widespread expectation among new migrants that they too would eventually become property owners even if they acquired land through informal or extralegal means (Richardson 1987). De Soto built his advocacy for private-property rights on the notion of “dead capital,” which, under different circumstances, could be invested to reinvigorate the urban economy. Notably, de Soto did not advocate a multifaceted and comprehensive package of policies, combining tenuring, provision of infrastructure, and building loans, all at once—the kind of approach the World Bank had espoused earlier. De Soto focused strategically on advocating only private property rights that, he argued, would create a chain reaction of formal borrowing and investment by property owners. Th is would increase municipal revenue from property taxes and generally create good citizens who would strengthen both capitalism and democracy (de Soto 2000). Many assumptions underlie de Soto’s recommendation. Foremost is the belief that well-demarcated private property rights would bring “dead capital” to life, encouraging more investment in housing consolidation and other economic activities that the poor could pay for by borrowing against housing equity. Such new investments would open up social and economic improvements of all kinds—ranging from better nutrition to more schooling for the immediate family members of new homeowners. The pace of housing consolidation would also increase, and the concomitant rise in housing values would lead to an increase in municipal revenues in the form of property taxes, which could then be channeled to improve public infrastructure. This, in turn, would further increase housing values, generating more wealth and “live capital” for a new round of investment. De Soto’s argument was appealing not simply because of its optimistic outlook but also because it was presented as a policy that could be implemented quickly and at a relatively low cost to public authorities. To de Soto, implementation of his recommendation merely needed the political will to grant private ownership rights; the rest of the process would follow, led by

Informal Land Markets and Policy

185

newly organized market forces as well as newly empowered citizens—much as democracy and capitalism reinforced each other in the development of Western nations. As Galiani and Schargrodsky document in Chapter 3, the granting of private property rights can have considerable positive impact even without the all-encompassing good effects that de Soto predicted. Galiani and Schargrodsky base their findings on the comparison of only two cases in Buenos Aires, and hence their conclusions are more indicative than defi nitive. Their assertion—that granting private property rights does not lead to more commercial lending by formal banks—is interesting and deserves further research because de Soto predicted a different scenario. But all is not lost. As Galiani and Schargrodsky demonstrate, other benefits to having private property rights come to light, including an overall positive change in the attitude of property owners toward other modernization objectives, such as lower fertility rates, better schooling, and even fewer teenage pregnancies. Like Albert Hirschman (1971), who warned that “all good things do not go together,” Galiani and Schargrodsky’s conclusion needs more exploration in other places. Granting private property rights may lead to housing improvements, but as Hirschman (1984) demonstrated, many occupants of informal settlements erected well-built units because they believed that government agencies would hesitate to destroy good houses even if built illegally. Regarding home equity loans, Galiani and Schargrodsky’s evidence supports the understanding that private property owners in newly formalized areas generally do not seek mortgages; in fact, they are very protective of their newly established ownership rights because they have typically experienced a long period of anxiety about whether they could hold onto their home. In other words, the time may not be right for the mortgage market to flourish. On the lending side, commercial banks are not eager to lend small amounts to a large number of borrowers even if they have private property rights (Jumani 1991). This is one of many organizational constraints that impeded the large-scale implementation of government efforts to grant private property rights to previous informal owners. One common obstacle is that precise demarcation of property boundaries and establishing of clear lines of ownership is not easy in informal settlements. Multiple and confl icting claims usually emerge as soon as communities are notified of formalization (Meinzen-Dick and Mwangi 2009). Resolving multiple claims requires extensive record keeping, record checking, and resolution of legal

186

Public Policy Perspectives

disputes, which can be very costly, labor intensive, and politically contentious. That is why NGOs—particularly those based in the newly formalized areas—can be helpful as intermediaries between “the state” and “the people.” However, they too add yet another layer of paperwork to the transaction cost. And acknowledging the role of political parties in this already complicated situation helps explain why simply providing infrastructure to previously unauthorized areas can be easier than sorting through multiple and conflicting claims of home ownership. The process differs, of course, depending on whether it is private or public land that is to be subdivided into privately owned parcels. As Silva and Mautner describe in Chapter 5, converting public land to private ownership may require a very different process— less expensive for the government—than government purchase of private lands (the method used in the Buenos Aires case studied by Galiani and Schargrodsky). Which process would be easier to implement is, of course, not dependent only on who owned the land before. There are many other issues: Who occupied the land in the past? What was the spatial pattern of land division internal to the area? Who were “owners” and how many were renters? Who has to be resettled to make room for the provision of infrastructure? Who will decide the level of compensation for relocation? The list of questions to be answered by public planners on the ground can be daunting, and as common wisdom cautions, the devil is in the details. Such issues must be dealt with judiciously, particularly in an intense political climate.

Slum Redevelopment: A New Timely Approach?

As Mukhija discussed in Chapter 8, slum redevelopment has emerged as an alternative strategy in Mumbai—an economically growing city within an economically growing state and nation. The rate of economic growth matters hugely in public discussions about whether to pursue slum redevelopment. In the past, when economic growth was slow and sluggish, the conventional wisdom among planners was that a certain level of infrastructural improvement was necessary to spur growth; but as economic growth increased by leaps and bounds—despite inadequate infrastructure—public policy calculations about how to house the urban poor changed. As the land values of previously informal settlements or slums increased steadily and sharply, these areas began to draw attention from policy makers, private developers, and NGOs for somewhat different but also overlapping reasons.

Informal Land Markets and Policy

187

Both Mukhija (Chapter  8) and Chattaraj (Chapter  6) describe the process vividly. The policy implications of such unprecedented growth are important to grasp in any discussion of housing supply for still poor urban households. First, economic growth and increasing land values are creating new opportunities for urban authorities; they have great interest in how to capture some of the benefits of higher land values through policies such as land readjustment, increase in floor-area ratios, transfer of development rights, and so on. Mukhija’s assessment is optimistic: he envisions a win-win situation for all—the inhabitants of newly redeveloped areas, the private developers, and the public authorities. That is why he prefers the relatively new redevelopment approach over conventional upgrading schemes. Is slum redevelopment the “silver bullet” that planners have been searching for? Since old ways of housing the poor have been discredited as not being market savvy, requiring large subsidies, demanding government involvement at every step of the process, and ensuring more opportunities for bureaucratic rent seeking than better housing, slum redevelopment at first glance looks promising. Yet so far, results are mixed at best. As Balakrishnan (Chapter 7) points out, the management of land markets, even in periurban areas, is not as straightforward as portrayed by land readjustment advocates. In Bangalore—an Indian city not so economically vibrant as Mumbai but still growing at a rate higher than the national average—the poor are not generally benefiting from the upsurge in land value, in part because public institutions, which ought to create mechanisms for distributing the benefits of high land values, do not function the way they should in protecting the interests of the poor. Balakrishnan compares her findings in Bangalore to Ahmedabad, India—a relatively prosperous city that adopted land readjustment policies before Bangalore—and suggests that Ahmedabad’s relative success cannot be replicated in Bangalore because of political and institutional constraints. Yet the Ahmedabad case offers much to learn about the efficacy of land readjustment policies. In contrast to Bangalore, the implementation of readjustment policies in Ahmedabad has been relatively easier in the periurban areas than in the old city, which is highly congested and multiethnic (Adhvaryu 2011). Further, the construction of the ring road around the city of Ahmedabad relied on the basic principle of land readjustment without much resistance from previous landowners, who were compensated at prices mutually negotiated over a reasonable period (Ballaney and Patel 2009). Why this could be achieved in Ahmedabad but not in Bangalore is an interesting

188

Public Policy Perspectives

question, but it does not directly address the distributional impact of land readjustment policies. Who among the poor benefits from such an approach? What happens to renters, as Silva and Mautner (Chapter 5) ask? Most redevelopment efforts lead to higher rents. To what extent can such ill effects, which cause gentrification, be moderated with better compensatory policies for resettlement? Another key question is whether the discussion of such redistribution issues is ideologically less polarized when the “collective pie” to be shared is larger and private developers are eager to implement projects quickly? This is a relatively new phenomenon in a few Indian cities as big developers, sometimes externally funded, compete with local housing groups and NGOs also interested in redeveloping old settlements (Mukhija 2003). NGOs do have a comparative advantage in this process because they have better, more finegrained information than developers or government agencies regarding local households, their fi nancial expenditures and expectations, and their willingness and ability to pay for redevelopment. No wonder then that some NGOs want to serve as brokers between the developers, government agencies, and slum dwellers (Sanyal and Mukhija 2001). But that role can become contentious, too, once NGOs begin to mediate reallocation decisions. Under certain circumstances, private developers may prefer to pay off residents directly with attractive monetary offers rather than becoming bogged down by complicated concerns about which residents have to be relocated, where, for how long, and so on. A booming land market creates a very different dynamic among the key players in slum redevelopment. Its ultimate impact on poor households is conditioned not wholly but to a significant extent by the level of political mobilization of the poor as a group, which can negotiate a better deal for itself. Chattaraj (Chapter 6) argues that any such process is intensely political and rightly cautions against overemphasis on legal processes such as land regularization as a technical way to facilitate redevelopment. Even after many years of research on the political economies of urban development, the question of how to engage with and intervene in such a political process to benefit the urban poor remains unanswered.

Three Questions for Future Research Even though much has been learned over the past forty years regarding informal real estate markets, there is a need for continuous learning to improve

Informal Land Markets and Policy

189

the functioning of such markets—particularly to increase the access of the urban poor to decent housing at affordable prices. It is widely known by now that formal and informal real estate markets are integrated in more ways than one; and as Gouverneur (Chapter 10) proposes, more integration—if pursued with concern for the poor—can improve the overall efficiency of urban land markets. With that goal in mind, I propose three sets of research questions that deserve attention.

The Urban Poor’s Housing Preference

There is still much ambiguity about how the urban poor make decisions regarding housing consumption. Unlike in industrialized nations where household expenditure and savings patterns have been studied quite carefully (Pollak 2003), in newly industrializing nations, there is still no definitive study that explains well the rationality underlying household expenditure (Banerjee and Duflo 2011). This is not to say that policy makers know nothing about the poor’s preferences; much is known about how employment and income generation—not housing—is of topmost priority for the poor (Rodgers 1989). Rural peasants migrate to cities looking for jobs, not housing, and even after they gain a usually precarious foothold in the urban economy, poor households move not to consume more housing but to seek out more predictable and better-paying employment. True, all people need to live somewhere, even while they are searching for economic opportunities, but what the poor might be willing to pay to improve their housing is still not very well understood. Over the years, urban planners have learned how important it is for the poor to live in proximity to income-earning opportunities; however, there is still much uncertainty about how a poor household is likely to spend the “marginal dollar” if it is fortunate to earn more. In Chapter 3, Galiani and Schargrodsky do not address this question. They assume that Becker’s analysis (1965) of Western household expenditure can be universalized. Yet their data suggest that the urban poor do not borrow against housing equity; neither do they rent more space even after formalization of their property status. Do the urban poor save more once their property ownership has been formalized? Or do they invest in continuously consolidating their property after legalization? Many issues, not all well understood, affect how urban poor households assess risk, social status, and what they consider necessary for meaningful lives. Not all such expenditures fit

190

Public Policy Perspectives

neatly into the categories of Becker’s rational model of household behavior (1965).3 How the urban poor perceive housing—whether as a commodity, a form of investment, a social and psychological marker of stability and rootedness, or all of these and more—needs better understanding. To put it in another way, the analysis of the informal real estate market needs to be embedded in a broader view of how the urban poor think, what they prefer to pay for, and how such choices are shaped by constraints as well as opportunities in cities experiencing differential rates of economic growth.

The Impact of Formalization

Even though there seems to be wide support for formalization, its varying impacts, as documented by the authors in this volume, need better explanation. Do all formalization efforts lead to increased rents and some form of gentrification? Which sequence of steps in the formalization process— legalization followed by provision of infrastructure or the other way around— has what effect on real estate markets? More important, since informal settlements are so intensely political in nature, as Perlman and Chattaraj (Chapters 4 and 6) point out, what is the best way to initiate a formalization process that is bound to upset the status quo of power relationships? There are so many questions that need to be answered to fi ne-tune which package of policies—legalization, increasing floor-area ratios, providing infrastructure, transferring development rights, zoning, or building regulations—are likely to have what kind of impact, where, and on which residents of currently informal settlements areas. As Silva and Mautner (Chapter 5) note, a central issue is who owns the land before formalization and redevelopment. Reimbursing private owners, as was the case in Buenos Aires (described by Galiani and Schargrodsky in Chapter 3), is not simple: Deciding on market prices for urban land and mustering the resources for monetary compensation can be particularly difficult for cities with very limited resources. In this regard, it may be worthwhile to remember the many problems faced by previous land banking schemes (Angel 2000). True, the economic situation is different in growing economies such as India or Brazil, and that is why large-scale land readjustment schemes may not require land banking by public agencies. Still, land procurement for either formalization or redevelopment projects is not an easy task. How land

Informal Land Markets and Policy

191

is acquired directly affects redevelopment costs, which in turn affects who has to pay how much for housing in redeveloped areas. There are multiple causalities and interconnections that need to be understood better if state, market, and civil society groups are to join hands in formalizing informal real estate markets in ways that ensure the burden of uncertainty is not passed on to those whose lives are most vulnerable.

Who Should Be Doing What and Why?

Th is is the question Turner (1967) raised fi ft y years ago when he argued against slum clearance and public construction of a few high-standard housing units, which the poor never received. Turner’s argument then is important to remember now as China expands housing supplies in a way that was totally discredited, not only by Turner, but also by the World Bank when it first intervened in housing delivery for the urban poor in developing countries. The government should not be in the business of housing construction, the World Bank advised. Instead, the poor themselves would incrementally build their homes if only governments did not demolish informal settlements but rather rethought what are considered acceptable standards and simply provided infrastructure to the informal settlements—incrementally, and with labor contributed by the communities to reduce costs of providing infrastructure. As mentioned earlier, the World Bank changed its recommendations a decade later, suggesting that governments should be even less involved directly in supplying housing. Government’s role was to facilitate the functioning of markets—capital, land, and labor. As these markets function better, they will supply housing without subsidies of the kind governments cannot afford. As Acolin, Chattaraj, and Wachter (Chapter 1) document, China did not follow the World Bank’s model. In China, land is nationalized, and local governments are deeply involved in building, allocating, and maintaining housing. In comparison to India, China has performed better in housing its urban poor, primarily because of the active involvement of local governments, which have been entrepreneurial in structuring attractive “deals” with private developers as well as public agencies to provide affordable housing of a decent quality (Junhua, Rowe, and Jie 2001). Why is China able to supply such housing while other comparable countries, such as India, lag behind? It is not that the Indian government has not

192

Public Policy Perspectives

been concerned about housing the urban poor: there have been many efforts (mostly at the national level) to devise policies and programs and create specialized institutions such as National Housing Bank to influence housing construction (McKinsey Global Institute 2010). Such efforts intensified only a few years ago with a fairly well-funded program to create “slum-free cities” (MHUPA 2011). This program advocated the formalization of informal areas and offered large incentives to encourage state governments to propose schemes for legalization and infrastructure delivery in consultation with local governments, low-income communities, and NGOs. On July 19, 2014, the national government took a step further to facilitate housing mortgages; the Indian government will now provide incentives to prospective homeowners by altering the tax codes to facilitate borrowing for housing. Will such policies speed up housing supply for the urban poor? Rigorous assessments of past housing policies in India are rare; but popu lar perceptions—which are vocally articulated in India’s democratic tradition— have been mostly pessimistic (Kundu 1990). In the preface to a recent book on Indian cities entitled Transforming Indian Cities: Challenges and Opportunities (Ahluwalia 2014), the former Indian prime minister Dr. Manmohan Singh proposed that India’s Constitution needs to be modified to empower local governments to take on the kind of entrepreneurial role exemplified by Chinese cities. The author herself applauds land readjustment schemes, as implemented in Ahmedabad by the city development authority rather than the municipal government or an urban planning agency (these played relatively minor roles). The Ahmedabad development authority offered attractive deals to private developers to work together in providing housing, 20  percent of which was earmarked for low-income households. These households were to be cross-subsidized by charging other households slightly more than “market prices” for their houses. Sanyal and Deuskar (2012) observed that the land prices paid by relatively well-off families were actually far lower than the real market prices, and of the 20 percent plots to be allocated for the poor households, very few had been allocated by the time of the study. Who is to do what about increasing the supply of housing for the urban poor? If informal settlements are to be transferred into formal real estate markets in such a way that the poor’s access to housing is increased, not decreased, local governments have to play a leading role. City development authorities can be key actors, but such authorities are unlikely to respond to the needs of the poorest. This is not a new insight but one that needs to be

Informal Land Markets and Policy

193

studied rigorously to determine why and how some local governments perform better than others in working with other institutions. In democratic societies such as India or Brazil, where formal and informal political processes are deeply intertwined, how do progressive, pro-poor policies emerge? Which policies are easier to implement where, and in which sequence, so as to minimize political opposition from entrenched interests? These are all strategic questions that require more research.

This page intentionally left blank

NOTES

Preface 1. Since 2003, the word “slums” has a technical definition used by the UN to measure their presence (UN Habitat 2003). In this book, the authors use this term and “informal settlements” interchangeably.

Chapter 1. Urban Governance and Development of Informality in China and India 1. Scholars and international organizations argue that India’s urbanization levels are significantly underestimated in official statistics and may not present an accurate picture of India’s urbanization levels (Denis, Mukhopadhyay, and Zerah 2012; Pradhan 2012; Denis and Marius-Gnanou 2011; World Bank 2013). Recognizing the general challenge in providing reliable and comparable data for these two countries, this chapter relies mostly on data aggregated at the national level over long periods that are expected to capture the broad trends if not the specific levels of the phenomenon described. 2. We are aware of the wide differences of development between regions and cities within each country, resulting in a vast disparity in fiscal capacity and in the dependence on redistribution from the central government (Antholis 2013), but we focus on aggregate outcomes in both countries for the purpose of this chapter. India and China each have a number of very dynamic, highly developed, mostly coastal urban centers, while other regions lag behind in terms of urbanization and economic development. But overall China has experienced more urban development than India and less of it is informal in nature. 3. Other estimates of the share of public expenditures and revenues controlled by subnational governments in China are even higher. Figures reported from the China Financial Yearbook for 2005 by Fock and Wong (2008) estimate the share of public expenditures controlled by subnational levels of government to be 74.2 percent, with a 55.3 percent share for the lower tier of local government. Taking these variations into account, the differences between India and China in terms of the local government share of public revenue and expenditure appear robust.

196

Notes to Pages 12–17

4. For more details on China’s floating population and Hukou system, see, for example, Liang and Ma (2004); Sicular et al. (2007); Logan, Fang, and Zhang (2009); and Shen (2013). 5. Unlike China, which is politically centralized and administratively decentralized, India’s local governments are democratically elected and not accountable to a subnational or central level. However, their powers and capacities are limited, and many of their functions overlap with the subnational level. 6. For an argument in favor of supporting rural activity rather than urbanization, see Mishra (2013), “India’s Path to Prosperity Doesn’t Run Through Cities.” 7. India’s real wages fell 1 percent between 2008 and 2011, while labor productivity grew 7.6 percent in the same period, indicating that the benefits of the country’s economic growth did not translate into better pay for workers. In contrast, China’s real wage growth was 11 percent, while labor productivity expanded 9 percent over the same period. India’s real wage growth was 1 percent in 1999–2007, while labor productivity rose by 5 percent. In 1999–2007, China’s real wage growth was 13.5 percent, while labor productivity growth was 9 percent (ILO 2013). 8. Exactly how much poverty levels have fallen in India over the past few years remains hotly debated (Kumar and Singh 2013). 9. Although nationally, rural poverty remains higher than urban poverty, the gap is closing (UNDP 2009). 10. Informality can be seen as a way to sidestep state regulations, as well as taxes and fees, usually with state complicity. While informal residents, workers, and employers contribute to state revenues in various ways, much of the contributions from the informal sector make their way into the private pockets of state officials rather than public coffers, instead of contributing to the financing of public goods. 11. Illegal sand mining and the powerful “sand mafia,” fueled by unregulated building construction, have recently been in the news in India (Sugden 2013). 12. Malpezzi (2011) reports results showing a correlation of 0.55 between urbanization and GDP per capita. Th is strong correlation does not imply causation, but it implies that overall the positive agglomeration economies associated with urbanization outweigh negative features of agglomeration (congestion, pollution, crime). 13. Although local governments cannot directly borrow, the focus on local GDP growth as the main way to evaluate local officials’ performance has encouraged the use of instruments enabling heavy borrowing to finance infrastructure and spur economic growth, resulting in local governments owing or guaranteeing $2.9 trillion of debt (31 percent of GDP) as of June 2013, according to the National Audit Office (Associated Press 2013). 14. A major difference in India and China is the fact that in China, the state owns all the land. Municipal and local governments can therefore raise revenues through land allocation. In India, land in rural areas is privately owned, mostly in small parcels, and thus land acquisition is complex and politically fraught.

Notes to Pages 24–42

197

Chapter 2. Comparative Evidence on Urban Land- Use Regulation Bureaucracy in Developing Countries This chapter was produced as part of research conducted in the context of the project “Urbanization and Development: Delving Deeper into the Nexus” managed by the Global Development Network. The funds for the present study were provided by the Institutional Capacity Strengthening Fund of the Inter-American Development Bank (IDB) as part of the IDB Initiative on Strengthening Policy Links between Latin America and Asia, and thanks to the contribution of the Government of the People’s Republic of China. The views expressed in this publication are those of the authors alone. The authors would like to thank George Mavrotas, Anthony Venables, Cara Griffin, Susan Wachter, Shahana Chattaraj, Eugenie Birch, and the participants at the Global Development Network research workshop in Rio de Janeiro on January 24–25, 2013, and the seminar on Real Estate Markets in Informal Settlements in India and Brazil at the University of Pennsylvania on April 25, 2013, for helpful comments. Wenchong Lai provided excellent research assistance. 1. This is a core assumption of the de Soto (1986, 2000) argument about regulation and informality and has not been tested widely with empirical evidence. One recent exception is Monkkonen and Ronconi (2013). 2. Although there is generally less compliance with regulations in developing countries, the problem is endemic. Recent work documents lax enforcement in rich countries such as the United States (Mukhija 2014). The issue of enforcement deserves greater attention, especially when discussing the impacts of informality on land and property markets (Monkkonen and Ronconi 2013). 3. More information available at www.doingbusiness .org and www .enterprisesurveys.org. 4. Roughly half of the data used are de jure indicators of regulatory stringency, whereas the other half measure regulation considering de facto use of bribery and extralegal payments. 5. Data from different years are pooled in this chapter’s analysis. For cities with multiple years of measures, we create an average value of the variable over time. 6. The Enterprise Survey is a stratified random sample with replacement and usually includes 1,500 firms in large economies, 360 firms in medium-sized economies, and 150 interviews in small economies. For details, see www.enterprisesurveys.org. 7. The fact that socialist and other legal systems’ rules governing property transfers are less onerous than those of common-law countries is possibly due to them having been developed more recently. This has enabled them to be based on best practices and to take advantage of technology.

198

Notes to Pages 48–61

Chapter 3. Urban Land Titling 1. For a survey of the literature on land property rights, see Galiani and Schargrodsky (2012). 2. See Galiani and Schargrodsky (2010) for a detailed discussion of the strength and threads to identification of the effects associated to this natural experiment. 3. The late treatment group was not yet in a legal situation to mortgage the land at the time that these data were collected (see Galiani and Schargrodsky 2010).

Chapter 4. The Formalization of Informal Real Estate Transactions in Rio’s Favelas 1. Funding for the longitudinal study came from the World Bank, the Tinker Foundation, consecutive Fulbright Awards, the British and Dutch Trust Funds, and Rio local and state government. Writing support came from the Ford Foundation and a Guggenheim Award. 2. The first phase of this study (June–October 2009) was sponsored by the International Housing Coalition through a grant from the Reaume Foundation. The author continued research on the topic through the writing of this chapter in 2014. 3. This was part of a World Bank Study (2010–2012). The Rio team she assembled for the four case studies included Marcelo Burgos, Marianna Cavalcanti, Mario Brum, and Mauro Amoroso. The resulting World Bank publication is titled “Bringing the State Back into the Favelas of Rio De Janeiro” (March 15, 2013). It is available as a pdf: http:// www-wds .worldbank .org /external /default / WDSContentServer/ WDSP/ IB/2013/03 /15/000333037_ 20130315115010/Rendered /PDF/760110ESW0P12300Rio0de0Janeiro 02013.pdf. 4. Some think this is a conservative estimate as many complexes were excluded from this census count, with an estimated sixty thousand residents. An exact count is nearly impossible to ascertain. 5. Most dwellings in these more established communities are multistory brick buildings with access to water and electricity (although not necessarily connected to the city grid). And not all residents are poor. In fact, the index of household appliances in these older communities is similar to the municipal average. Only the number of cars and computers show a marked difference. But the index of electro-domesticos is no proxy for membership in the middle class, and consumption of individual or collective goods and ser vices is not the same as being treated with respect and dignity. See “The Mystery of Mobility” and “The Importance of Being Gente” in Perlman (2010b).

Notes to Pages 62–91

199

6. This upgrading initiative is complemented by a massive project of new housing construction called My House, My Life, which has one product designated for “affordable” housing without expectation of cost recovery. Whether that will succeed in reaching the favela population is not yet clear but so far does not appear to be doing so. 7. In total, nine thousand military police officers work in these units, with the number expected to rise to twelve thousand by 2016. 8. Mariana Cavalcanti (2007) goes into excellent ethnographic detail on this point in her University of Chicago dissertation. 9. Interview with Zoraide, June 25, 2012. For more on Borel and its history, see Amoroso (2012). 10. The property tax would be a plus in terms of legitimacy but a negative in terms of added expense. Some of the proposed land regularization schemes propose tax subsidies or reductions in the first three to five years, gradually rising to the appropriate levels. Some suggest that residents of UPP favelas should be exempt from paying property and city taxes so that they can afford to continue living in their communities. 11. Interview with Dona Alaide (name changed) in Babilônia, July 2012. 12. For more detail on this, see chapter 7 of Perlman (2010b). 13. The French proverb is attributed to French novelist Alphonse Karr (1808–90) and appears in George Bernard Shaw’s “Revolutionist’s Handbook” (1903). 14. This is the title of a book by Marshall Berman (1982). It is a line from Karl Marx and Friedrich Engels’s Communist Manifesto.

Chapter 5. Tenure Regularization Programs in Favelas in Brazil 1. The Portuguese word favela will be used in this chapter to refer to Brazilian informal settlements. Its internationally recognized definition refers to a squatter settlement with poor urban ser vices and, generally, self-built housing. 2. The monthly minimum wage in 2006 corresponded to 350 BRL and in 2013 to 678 BRL. Considering 1 USD is equal to 2 BRL, the monthly minimum wage was 175 USD in 2006 and 339 USD in 2013. 3. While people invested extensively in home improvements, they did not necessarily do this as a result of the regularization process. The densification of favelas has been a common characteristic of the ongoing expansion process on the urban periphery over time. Further, households customarily spend a large portion of their income and free time on enhancing self-built houses by very small steps. 4. Resolution number 369 of the National Council for the Environment, edited in 2006 (Resolução CONAMA no. 369/2006), establishes rules for special cases when land tenure regularization of housing settlements for low-income population can be applied in areas of environmental preservation, specifically along margins of water streams and tops of hills, where occupation is forbidden by national environmental law. It states

200

Notes to Pages 94–99

that land tenure regularization in permanent preservation areas can be applied in specific situations and, among other restrictions, “along the margins of water streams as well as around lakes, lagoons and artificial reservoirs, according to Resolution number 303 of the National Council for the Environment, edited in 2002, must respect 15-meter-wide strips for water streams and a minimum of 50 meters for other described situations.”

Chapter 6. Property Markets Without Property Rights 1. This chapter is based on ethnographic field research conducted in Mumbai in August 2013. I also conducted fifteen semistructured interviews with Dharavi residents related to their housing. About half the people interviewed owned their homes, while another half were renters, including the real estate broker, Balaji, who had lived in Dharavi for forty years. Because I used a “snowballing” method and began within the Kumhar area, I “oversampled” owners. The only house reported as “self-built” by the owners rather than bought was a structure in Kumbharwada occupied by a family that had lived in Dharavi for four generations. 2. Interview with the author, 7 August 2013. All quotations from this source are from the same interview. 3. The Dharavi Redevelopment Project, approved by the Government of Maharashtra in 2004, will provide new housing within the redevelopment site for eligible slum households. Although these are intended for “legitimate” residents (both owners and tenants) who can prove residence in Dharavi before a specified “cut-off ” date, and there are provisions preventing the subsequent sale of resettlement houses for a ten-year period, the DRP has reportedly spurred speculative property sales. 4. Balaji’s observation contradicts much of the literature on property markets and likely reflects the par ticu lar political economy context of Dharavi and other informal settlements in Mumbai. 5. “Unorganized,” in official terminology, is used to refer to “informal” economic activity. 6. Acemoglu and Johnson find that “contracting institutions appear to matter only for the form of financial intermediation” (2005: 949). 7. The slum houses large numbers of migrant workers, and population estimates range between sixty thousand to one million residents. 8. The Slum Rehabilitation Scheme aimed to take advantage of Mumbai’s skyrocketing real estate prices in the 1990s to redevelop slums by incentivizing private-sector participation. 9. The committees’ recommendations for a community-driven planning process were not adopted by the government (“Dharavi Remake a Land Grab, Says Panel,” Times of India, 8 July, 2009). In 2012, Mehta was removed from the project (“Dharavi Revamp: ‘Ineffec tive’ Consultant Fired,” Hindustan Times, 15 September 2012). The Dharavi

Notes to Pages 99–105

201

Bachao Andolan, an umbrella group of opposition party and community leaders and NGOs, organizes opposition and renegotiates the terms of Dharavi’s redevelopment. 10. “Benami” property transactions, banned under the Benami Transactions (Prohibition) Act of 1988, nevertheless remain widespread in India, according to a legal blog (http://lawexplainedindia.wordpress.com/2013/05/09/benami-transaction-defined -and-the-relation-between-the-terms-benamidar-and-ostensible-owner/). 11. In the 1980s, the closure of Mumbai’s textile mills began Mumbai’s deindustrialization. The chawls have over the decades transformed from places that evoked the despair of joblessness, to lucrative sites for redevelopment (Adarkar 2011). Developers salivate over chawls located in prime central locations near industrial sites that are being repurposed,for high-end commercial development). 12. Interview with author, 8 August 2013. 13. In Dharavi, where property values outstrip that of most slums, landlords are likely to be far wealthier than their tenants, but in another “vacant land tenure” slum, Janata Squatter’s colony, “the social and economic status of landlords was precariously low, barely above that of their subtenants” (Yuva 1999: iii). The NGO Yuva, in a report on confl icts between landlords and tenants (or more accurately, tenants and subtenants) in Janata colony, found that the subtenants on average were better educated than the landlords and some had formal sector jobs (Yuva 1999). 14. While large-scale evictions and demolitions of slums have occurred in Mumbai, most recently in 2004, these targeted slums established after 1995 the state’s “cutoff ” date at the time. 15. Interview with author, 8 August 2013. 16. Donthi’s article (2014) on property markets in Gurgaon, a city of glass office towers and luxury housing developments that mushroomed over the past two decades on farmlands adjacent to New Delhi, describes a similar politically organized “nonsystem.” 17. In India, the regularization of informal settlements have tended to be one-off, often politically organized projects such as the tenancy rights movement in Calcutta (Kohli 1987), the Maharashtra government’s periodic extension of cut-off dates (Chattaraj 2012), or the Delhi administration’s recent regularization of numerous “unauthorized” developments. 18. A well-known case is Mumbai’s Hiranandani housing complex, where public land intended for low-income housing was transferred to a private developer, who violated his agreement with the government to develop luxury housing. See Aghor (2012). 19. MTSU. Collusion, Conflicts, Informal Systems, and Rent Seeking: The Great Prototype Indian Story of Urban Land Management in Mumbai. Available online at www .visionmumbai.org; undated.

202

Notes to Pages 107–133

Chapter 7. Periurban Land Markets in the Bangalore Region 1. Periurban denotes any spatial entity that is outside urban political jurisdiction and is either undergoing urbanization or displays both urban and rural characteristics. 2. During this period, I conducted sixty semistructured interviews with the Dalit household members in two spatially segregated Dalit colonies in the Bidadi region, the Abbankuppe Colony and the Ittamadu Colony. I also conducted thirty interviews with unskilled, informal migrant workers who have moved to the Bidadi region in search of work. 3. Tribals refers to indigenous people. India has a separate census category for them called the Schedule Tribes. 4. Interview with author, 25 April 2011. 5. Interview with author, 7 April 2011. 6. Exchange rate as of 13 July 2011: 1 USD = Rs 44.8. 7. Interview with author, 7 April 2011. 8. Ibid. 9. Interview with author, 10 April 2011.

Chapter 8. Rehousing Mumbai 1. The intensity of land development in urban planning is usually measured as the ratio between the total floor area developed for a project and its site area. Although in Mumbai, it is commonly called the floor space index, this measurement is more frequently known as the floor-area ratio (FAR) of a project. For example, if 20,000 square feet of built area were developed on a 10,000-square-foot site, its FAR would be two. The density of a project in urban planning is typically a function of the total number of housing units on a site, and it is usually measured in terms of the number of housing units built per unit area of site area. For example, if there are twenty dwelling units on a one-acre site, its density would be twenty dwellings units per acre. 2. A “slum area” in Mumbai, according to the Maharashtra Slum Areas Act of 1971, is defined as an area that includes housing unfit for human habitation due to dilapidation, overcrowding, irregular layout, lack of light and ventilation, or unsanitary conditions (Government of Maharashtra 1971). 3. The carpet area of a home refers to its usable area, or the area within a unit that can be covered by a carpet. It does not include the area of the walls, balconies, external corridors, staircases, and elevators. Carpet area is a common method used to measure house sizes in Mumbai.

Notes to Pages 133–161

203

4. The PMGP planned to redevelop 2,000 units on the original slum sites and 1,800 units on alternative sites in Dharavi for resettling slum dwellers displaced by road widening and other infrastructure improvement projects.

Chapter 9. Tenure Regularization 1. The City Statute introduced several instruments that can legalize land occupation, including the concessão de direito real de uso, or concession of the right of use to the land (mostly applicable for occupants of public land), and the usucapião urbano, or urban adverse possession, which is the right to the land after five years of uncontested occupation by a poor family (used primarily in private land situations).

Chapter 10. Making a Difference in the Predominantly Informal City 1. “The term ‘informal settlement’ often refers to illegal or semilegal urbanization processes, or unsanctioned subdivisions of land at the (then) urban periphery where land invasion took place—often by squatters, who erected housing units usually without formal permission of the landowner and often with materials and building standards not in line with the criteria of the local building code” (UN-Habitat 2003: 196). 2. For a more in-depth discussion, see Jordan 1995. 3. In England, for example, living conditions were so harsh in the overcrowded slums of the industrial cities that some philanthropists sponsored tenement blocks, and factories promoted the development of company towns. 4. For a discussion of social housing, see Whitehead and Scanlon (2008). 5. Le Corbusier’s proposals for the modernization of Paris, reflected in his project known as la Ville Radieuse, were to have a major impact on the CIAM audience and would influence the course of city planning and housing policies for decades to come. Although the demolition of a large area of Paris did not occur as he envisioned, similar urban-renewal initiatives became common practice throughout the world. Contemporary erasure of traditional urban areas as occurs today in emergent economies (as in China) can be traced to the principles advanced by CIAM. 6. In the mid-1950s a social housing project called 23 de Enero was constructed in Caracas, Venezuela. Considered one of the most ambitious social housing programs in the world, fift y high-rise housing blocks and fift y smaller blocks, emulating Le Corbusier’s Unité d’Habitation in Marseille, were erected to house migrants arriving from rural areas who were not familiar with the use of elevators, garbage chutes, and indoor kitchens or toilets. The single-use project also forced residents to commute to access jobs, ser vices, shops, and amenities. The project promptly deteriorated, and in time, its open spaces, which were on steep slopes, were occupied by informal settlements.

204

Notes to Pages 163–170

7. Dwellers in informal settlements expand and improve their homes, adapting them to their needs, acting as true living machines. They do so by bypassing the complex procedures and codes of formal urbanization. They pay low taxes, and utilities are many times taken free of cost by tapping into the networks, at least in the early phases of occupation. 8. For instance, in 1994 while I was general director of city planning at the Ministerio del Desarrollo Urbano in Venezuela, thorough technical studies were performed and contained in a compendium called the Plan for the Rehabilitation of Barrios of the Metropolitan Area of Caracas. They were produced by an academic who had been researching informality for years at a time when academia and the political milieu had neglected informal urbanization. This plan was enacted in 1996. The methodologies developed in this planning instrument were used to set forward a national program to upgrade informal settlements some years after I left the position in 2000, and they still guide informal settlement improvement plans in this nation. 9. “While the new police force is barely online, coordination of security with social ser vices has also been a challenge. A program of ‘quick impact’ projects called UPP Social is able to offer some assistance, but lacks the authority to encourage the rest of the federal, state and city governments to make long-overdue investments in education, health, sanitation and similar ser vices. Officials said that persuading the Rio government’s ‘Secretarias’ to coordinate with the Pacification Program has been difficult” (Isacson 2011). 10. For more discussion on Colombian conflict, see Livingstone 2004. 11. During the mandate of Professor Antanas Mockus, from 1995 to 1998, the city began rediscovering the benefits of urban life, as part of a carefully orchestrated communication strategy aimed at getting citizens out on the streets and into open spaces to socialize and enjoy activities. No major public works were accomplished; rather, very simple, low-cost effective moves were done, such as closing down avenues for pedestrians and cyclists, animated by cultural activities. The citizens began understanding that the municipality was caring for them, promoting a culture of peace and social cohesiveness. 12. Mayor Fajardo’s team prepared a Geographical Information System (GIS) map of the city that clearly revealed which areas required attention; those where crimes and unemployment were very high, accessibility was difficult, infrastructure and community ser vices were deficient; and those with a higher chance of being affected by natural forces, such as landslides or flooding. These were for the most part informal settlements and located on the higher elevations on the city or along the floodplains of the city’s creeks and the Aburrá River. 13. One of the most recent recognitions was granted to architect Alejandro Echeverri, director of the Empresa de Desarrollo Urbano de Medellín, the agency that was responsible for many of the successful interventions during Mayor Fajardo’s administration, and particularly for the achievements in the Northeastern Commune in the

Notes to Pages 171–190

205

Barrio Santo Domingo. Echeverri received the 2013 Veronica Rudge Green Prize in Urban Design from the Harvard Design School. 14. I have advanced these ideas in my book Planning and Design for Future Informal Settlements: Shaping the Self-Constructed City (2014). 15. For academics and such practitioners as Josep Luis Sert, Horacio Caminos, John Turner, and Peter Land, it had become evident that public agencies were falling behind in coping with the demand for housing for the poorest segments of the population and that residents of informal settlements had an unlimited drive to gradually self-construct their dwelling. That was the motivation that led them to create the site and ser vices programs. 16. A more detailed analysis of the benefits and limitations of previously attempted methods to deal with informal growth, as well as of the principles and design criteria set forward in the informal armatures approach, is contained in the author’s Planning and Design for Future Informal Settlement: Shaping the Self-Constructed City (2014). This publication also includes academic case studies that illustrate how the principles and design moves can be adapted to diversity of sites, varying in scale and in contextual and cultural nuances.

Chapter 11. Informal Land Markets The author would like to acknowledge the research assistance provided by Faizan Jawed Siddiqi and Babak Manouchehrifar, both graduate students in the Department of Urban Studies and Planning at the Massachusetts Institute of Technology. 1. For example, see Rodwin (1987), Payne (2002), and Cheema (1987). 2. The World Bank’s first report on cities in developing countries was published in July 1975. Proposed by G. Beier, A. Churchill, M. Cohen, and B. Reveard, this report was titled “The Task Ahead for the Cities of Developing Countries” (World Bank 1975). 3. New studies that draw on behavioral economics are promising in this regard. For example, see Camerer, Loewenstein, and Rabin (2004).

This page intentionally left blank

REFERENCES

Abramo, Pedro. 2012. Favelas vivem expansão do mercado de aluguéis. Folha de S. Paulo, October  12. http://www1.folha .uol.com.br/fsp/cotidiano/74710 -favelas -vivem-expansao-do-mercado-de-alugueis.shtml. Abrams, Charles. 1966. Housing in the Modern World. London: Faber and Faber. Accommodation Times. 1998. Property Rates in Mumbai. August 1, Mumbai. Acemoglu, Daron, and Simon Johnson. 2005. Unbundling Institutions.  Journal of Political Economy 113 (5): 949–95. Adams, Dale, and Delbert A. Fitchett. 1992. Informal Finance in Low-Income Countries. Colorado: Westview. Adarkar, Neera, ed. 2011. The Chawls of Mumbai: Galleries of Life. New Delhi: ImprintOne. Adhvaryu, Bhargav. 2011. The Ahmedabad Urban Development Plan-Making Process: A Critical Review. Planning Practice and Research 26 (2): 229–50. Afzulpurkar, Dinesh K. 1995. Programme for the Rehabilitation of Slum and Hutment Dwellers in Brihan Mumbai. Report of the study group appointed by the Government of Maharashtra for the Rehabilitation of Slum and Hutment Dwellers Through Reconstruction. Mumbai: Government of Maharashtra. Aghor, Ashwin. 2012. Bombay HC Halts Construction by Hiranandani Developers in Powai. Down to Earth, February  25. http://www.downtoearth.org.in /content / bombay-hc-halts-construction-hiranandani-developers-powai. Ahluwalia, I. Judge. 2014. Transforming Indian Cities: Challenges and Opportunities. New Delhi: Harper Collins India. Albanese, Mariana. 2012. 40 Houses Threatened in Vidigal. Rio on Watch, December 11. http://www.rioonwatch.org /?p = 6246. Alonso, William. 1964. Location and Land Use: Toward a General Theory of Land Rent. Cambridge, Mass.: Harvard University Press. Amoroso, Mauro. 2012. Caminhos do lembrar: a construçdropão e os usos políticos da memória no morro do Borel. Doctoral dissertation, CPDOC, FGV. http:// bibliotecadigital.fgv.br/dspace/ handle/10438/9609. Angel, Shlomo. 2000. Housing Policy Matters: A Global Analysis. New York: Oxford University Press. 

208

References

Angel, Shlomo, and Samsook Boonyabancha. 1988. Land Sharing as an Alternative to Eviction: The Bangkok Experience. Third World Planning Review 10 (2): 107–27. Angel, Shlomo, and Stephen K Mayo. 1993. The Housing Indicators Program: A Report on Progress and Plans for the Future. Journal of Housing and the Built Environment 8 (1): 13–47. Antholis, William. 2013. Inside Out, India and China: Local Politics Go Global. Washington, D.C.: Brookings Institution Press. Appadurai, Arjun. 2001. Deep Democracy: Urban Governmentality and the Horizon of Politics. Environment and Urbanization 13 (2): 23–43. Appadurai, Arjun. 2004. The Capacity to Aspire: Culture and the Terms of Recognition. In Culture and Public Action, edited by Vijayendra Rao and Michael Walton, 59–84. Telangana, India: Orient BlackSwan. Associated Press. 2013. Audit Finds China’s Local Government Debt Soaring. December  30. http://news.yahoo.com /audit-fi nds-china-39-local-government -debt-soaring-101302049—fi nance.html. Au, Chun C., and J. Vernon Henderson. 2006. Are Chinese Cities Too Small? Review of Economic Studies 73 (3): 549–76. Ayres, Robert L. 1984. Banking on the Poor: The World Bank and World Poverty. Cambridge, Mass.: MIT Press. Badshah, Akhtar. 1996. Our Urban Future: New Paradigms for Equity and Sustainability. London: Zed. Ballaney, Shirley, and Bimal Patel. 2009. Using the “Development Plan—Town Planning Scheme” Mechanism to Appropriate Land and Build Urban Infrastructure. In India Infrastructure Report 2009, 190–204. New Delhi: Oxford University Press. Banco Interamericano de Desarrollo (IDB). 2013. Programa de Apoyo a la Política de Vivienda Social— Colombia, Loan Document, Washington, D.C. Banerjee, Abhijit V., and Esther Duflo. 2011. Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. New York: PublicAffairs. Bardhan, Pranab. 1984. The Political Economy of Development in India. Delhi: Oxford University Press. Barzel, Yoran. 1997. Economic Analysis of Property Rights. Cambridge: Cambridge University Press. Basudeb, Bhatta. 2010. Analysis of Urban Growth and Sprawl from Remote Sensing Data. Advances in Geographic Information Science. Berlin: Springer. Becker, Gary S. 1965. A Theory of the Allocation of Time. Economic Journal 75 (299): 493–517. Becker, Gary, and Gregg Lewis. 1973. On the Interaction Between the Quantity and Quality of Children. Journal of Political Economy 81 (2): S279–88. Benjamin, Solomon. 2008. Occupancy Urbanism: Radicalizing Politics and Economy Beyond Policy and Programs. International Journal of Urban and Regional Research 32 (3): 719–29. Berman, Marshall. 1982. All That Is Solid Melts into Air. New York: Verso.

References

209

Bertaud, A., and J. K. Brueckner. 2005. Analyzing Building-Height Restrictions: Predicted Impacts and Welfare Costs. Regional Science and Urban Economics 35 (2): 109–25. Bertaud, A., and S. Malpezzi. 2001. Measuring the Costs and Benefits of Urban Land Use Regulation: A Simple Model with an Application to Malaysia. Journal of Urban Economics 10: 393–418. Bocarejo, Juan Pablo, and Luis Eduardo Tafur. 2013. Urban Land Use Transformation Driven by an Innovative Transportation Project, Bogota, Columbia. Case study prepared for Global Report on Human Settlements. Bradsher, Keith. 2013. Falling Economic Tide in India Is Exposing Its Chronic Troubles. New York Times, 5 September. http://www.nytimes.com/2013/09/05/business /global/indias-falling-economic-tide-exposes-its-chronic-troubles.html. Bradsher, Keith, and Neha Bagri. 2013. A Housing Slump in India. New York Times, 10  September. http://www.nytimes.com /2013/09/11/ business/global /a-housing -slump-in-india.html Brazilian Institute of Geography and Statistics—IBGE. Preliminary Synopsis of the Demographic Census 1950 and 1960. Rio de Janeiro: Brazilian Institute of Geography and Statistics. ———. Demographic Census 1970, 1980, 1990, 2000, 2010. Rio de Janeiro: Brazilian Institute of Geography and Statistics. ———. Synopsis of the Census 2010. Rio de Janeiro: Brazilian Institute of Geography and Statistics. Breman, Jan. 2013. At Work in the Informal Economy of India: A Perspective from the Bottom Up. New Delhi: Oxford University Press. Brown, Egypt, et al. 2006. Secure Tenure in Latin America and the Caribbean: Regularization of Informal Settlements in Perú, México and Brazil. Woodrow Wilson School of Public and International Affairs, Princeton University. Brugmann, Jeb. 2010. Welcome to the Urban Revolution: How Cities Are Changing the World. New York: Bloomsbury. ———. 2013. The Making of Dharavi’s City-System. In Dharavi: The City Within, edited by J. Campana, 41–54. Dharavi: HarperCollins India. Buckley, R. M., and J. Kalarickal, eds. 2006. Thirty Years of World Bank Shelter Lending: What Have We Learned? Washington, D.C.: World Bank. Buckley,  R.  M., and  A.  S. Mathema. 2007. Is Accra a Superstar City? World Bank Policy Research Working Paper No. 4435. Burgess, Rod. 1978. Petty Commodity Housing or Dweller Control? A Critique of John Turner’s Views on Housing Policy. World Development 6 (9): 1105–1133. ———. 1992. Helping Some to Help Themselves: Third World Housing Policies and Development Strategies. In Beyond Self-Help Housing, edited by Kosta Mathey, 75–91. Munich: Profi l Verlag. Burns, Leland S., and Leo Grebler. 1977. The Housing of Nations: Analysis and Policy in a Comparative Framework. New York: Halsted.

210

References

Calfee, C.; P. Monkkonen; J. M. Quigley; S. Raphael; L. A. Rosenthal; and J. Wright. 2007. Measuring Land-Use Regulation. Report to the MacArthur Foundation, Professional Report No. P07-002, Berkeley Program on Housing and Urban Policy. Camerer, Colin. F.; George Loewenstein; and Matthew Rabin, eds. 2004. Advances in Behavioral Economics. Princeton: Princeton University Press. Cantuarias, Fernando, and Miguel Delgado. 2004. Peru’s Urban Land Titling Program. In Reducing Poverty, Sustaining Growth—What Works, What Doesn’t, and Why: A Global Exchange for Scaling Up Success. Washington, D.C.: World Bank. Cavalcanti, Mariana. 2007. Of Shacks, Houses, and Fortresses. Doctoral dissertation, University of Chicago. Census of India. 2011. Rural Urban Distribution of Population. http://censusindia.gov .in/2011-prov-results/paper2/data _ fi les/india/Rural _Urban _ 2011.pdf Cezario Spinazzola, Patrícia. 2008. Impactos da regularização fundiária no espaço urbano. Universidade de São Paulo, FAU (dissertação de mestrado), São Paulo, Brazil. Chan, K. W. 2009. The Chinese Hukou System at 50. Eurasian Geography and Economics 50 (2): 197–221. Chan, Kam W., and Zhang Li. 1999. The Hukou System and Rural-Urban Migration in China: Processes and Changes. China Quarterly 160: 818–55. Chandrasekhar, C. P., and Jayati Ghosh. 2007a. Self- Employment as Opportunity or Challenge. Macroscan.http://www.macroscan.org/fet/mar07/pdf/Self_employment .pdf. ———. 2007b. Recent Employment Trends in India and China: An Unfortunate Convergence? Social Scientist 35(3–4): 19–46. Chattaraj, Durba. 2010. Roadscapes: Everyday Life Along the Rural-Urban Continuum in 21st Century India. Ph.D. dissertation, Yale University. Chattaraj, Shahana. 2012. Shanghai Dreams: Urban Restructuring in Globalizing Mumbai. Ph.D. dissertation, Princeton University. Chatterji, Roma. 2005. Plans, Habitation and Slum Redevelopment: The Production of Community in Dharavi, Mumbai.  Contributions to Indian Sociology  39 (2): 197–218. Cheema, G. Shabbir. 1987. Urban Shelter and Services: Public Policies and Management Approaches. New York: Praeger. Chen, Martha Alter. 2005. Rethinking the Informal Economy: Linkages with the Formal Economy and the Formal Regulatory Environment. United Nations University, World Institute for Development Economics Research. Clichevsky, Nora. 2003. Pobreza y acceso al suelo urbano: Algunas interrogantes sobre las políticas de regularización en América Latina. Serie Medio Ambiente y Desarrollo, CEPAL, Santiago, Chile. Coase, Ronald. 1960. The Problem of Social Cost. Journal of Law and Economics 3 (Oct.): 1–44.

References

211

Cohen, Michael; Castillo Madavo; and Harold Dunkerley. 1983. Learning by Doing: World Bank Lending for Urban Development 1972–1982. Washington, D.C.: World Bank. Colliers Jardine. 1998. Bulletin: India, Property Highlights. Mumbai: Colliers Jardine. Curtis, William. 1986. Modern Architecture Since 1900. Oxford: Phaidon Press. Daily. 1984. To Solve Slum-Dwellers’ Woes: Dada Ready to Raise FSI. October  30, Mumbai. Dantas, Pedro. 2009. Empresário desiste de projeto no Vidigal. O Estado de S. Paulo, October 28. De Soto, Hernando. 1986. El Otro Sendero. Lima, Peru: Instituto Libertad y Democracia. ———. 1989. The Other Path: The Invisible Revolution in the Third World. New York: Harper and Row. ———. 2000. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic. Denis, Eric, and Kamala Marius-Gnanou. 2011. Toward a Better Appraisal of Urbanization in India: A Fresh Look at the Landscape of Morphological Agglomerates. Cybergeo: European Journal of Geography 569. Denis, Eric; Partha Mukhopadhyay; and Marie-Hélène Zérah. 2012. Subaltern Urbanisation in India. Economic and Political Weekly 47 (30): 52–62. Desai, Vandana. 1988. Dharavi, the Largest Slum in Asia: Development of Low-Income Urban Housing in India. Habitat International 12 (2): 67–74. Desmet, Klaus; Ejaz Ghani; Stephen O’Connell; and Esteban Rossi-Ansberg. 2012. The Spatial Development of India. Policy Research Working Paper Series 6060, World Bank. Di Tella, Rafael; Sebastian Galiani; and Ernesto Schargrodsky. 2007. The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters. Quarterly Journal of Economics 209–41. Djankov, Simeon, and Rita Ramalho. 2009. Employment Laws in Developing Countries. Journal of Comparative Economics 37: 3–17, D’monte, Darryl. 2002. Ripping the Fabric: The Decline of Mumbai and Its Mills. New Delhi: Oxford University Press. Doebele, William A. 1983. Concepts of Urban Land Tenure. In Urban Land Policy: Issues and Opportunities, edited by Harold B. Dunkerley, 63–107. New York: Oxford University Press. Donthi, Praveen. 2014. The Road to Gurgaon. Caravan, January 1. Dossal, Mariam. 1996. Signatures in Space: Land Use in Colonial Bombay. In Bombay: Metaphor for Modern India, edited by Sujata Patel and Alice Thorner, 89–99. New Delhi: Oxford University Press. Dowall, David. 1992. The Benefits of Minimal Development Regulation. Habitat International 16 (4): 15–26.

212

References

Dowall, D. E., and P. Monkkonen. 2007. Consequences of the Plano Piloto: Urban Land Markets in Brasília. Urban Studies 44 (10): 1871–87. Drèze, Jean, and Amartya Sen. 2013. An Uncertain Glory: India and Its Contradictions. Princeton: Princeton University Press. Dua, Ajay. 1989. Towards Shelter for All: The Bombay Experiments. In Urban Management in Asia: Issues and Opportunities, 161–73. New Delhi: National Institute of Urban Affairs. Durand-Lasserve, Alain, and Lauren Royston, eds. 2002. Holding Their Ground: Secure Land Tenure for the Urban Poor in Developing Countries. London: Earthscan. Duranton, Gilles. 1999. Distance, Land, and Proximity: Economic Analysis and the Evolution of Cities. Environment and Planning A 31 (12): 2169–88. Dwivedi, Sharada, and Rahul Mehrotra. 1995. Bombay the Cities Within. Bombay: India Book House. Economist. 1995. The Most Expensive Slum in the World. May 6, London. ———. 2007. Urban Poverty in India: A Flourishing Slum. December 19, London. ———. 2012. The Minimum City. June 9, London. Fardoust, Shahrokh, and V. J. Ravishankar. 2013. Subnational Fiscal Policy in Large Developing Countries: Some Lessons from the 2008–09 Crisis for Brazil, China and India. World Bank Research Working Paper 6409. http://www-wds.worldbank . org /external /default / WDSContentServer / IW3P / IB / 2013 /04 /15 /000158349 _ 20130415094833/Rendered/PDF/wps6409.pdf. Fernandes, Edésio. 2003. Perspectivas para a renovação das politicas de legalização de favelas no Brasil. In A Cidade da Informalidade, edited by Pedro Abramo. Sete Letras Library, Rio de Janeiro. ———. 2011. Regularization of Informal Settlements in Latin America. Policy Focus Report. Cambridge, Mass.: Lincoln Institute of Land Policy. FICCI/Ernst and Young. 2012. http://www.ey.com/Publication/vwLUAssets/Accelerating _ PPP _ i n _ Ind ia / $FILE /Accelerat i ng %20PPP%20i n%20Ind ia%20 - %20 FINAL(Secured).pdf. Field, Erica. 2005. Property Rights and Investment in Urban Slums. Journal of the European Economic Association Papers and Proceedings 3 (2–3): 279–90. ———. 2007. Entitled to Work: Urban Property Rights and Labor Supply in Peru. Quarterly Journal of Economics 122 (4): 1561–1602. Field, Erica, and Maximo Torero. 2003. Do Property Titles Increase Access to Credit? Evidence from Peru. Working Paper, Harvard University, Cambridge, Mass. Fille, Martin. 1991. Architecture View; Baron Haussmann, Urban Designer Par Excellence. New York Times, 24  March. http://www.nytimes.com/1991/03/24/arts /architecture -view - baron - haussmann - urban - designer - par - excellence . html ?pagewanted= print&src = pm.

References

213

Fock, Achim, and Christine Wong. 2008. Financing Rural Development for a Harmonious Society in China: Recent Reforms in Public Finance and Their Prospects. World Bank Policy Research Working Paper 4693. Forte, Jay. 2013. Estimated 23% of Rio Favela Homes to Be Legalized. Rio Times, 31  December. http://riotimesonline.com/ brazil-news/rio-politics/ local-politics -rio-politics/estimated-23-percent-of-rio-favela-homes-to-be-legalized/. Frank, Andre Gunder. 1969. Latin America: Underdevelopment or Revolution. Essays on the Development of Underdevelopment and the Immediate Enemy. New York: Modern Reader/Monthly Review. Friedman, Joseph; Emmanuel Jimenez; and Stephen K. Mayo. 1988. The Demand for Tenure Security in Developing Countries. Journal of Development Economics 29 (2): 185–98. Frischtak, Claudio, and Benjamin R. Mandel. 2012. Crime, House Prices, and Inequality: The Effect of UPPs in Rio. Federal Reserve Bank of New York Staff Reports, no. 542, January. Fujita, Masahisa; Paul R. Krugman; and Anthony J. Venables. 1999. The Spatial Economy: Cities, Regions and International Trade. Vol. 213. Cambridge, Mass.: MIT Press. Fundação João Pinheiro; Ministério das Cidades, Secretaria Nacional de Habitação. 2011. Déficit habitacional no Brasil 2008. Ministério das Cidades, Secretaria Nacional de Habitação, Brasília. Furtado, Bernardo, Vicente Correia Lima Neto, and Cleandro Krause, for the Instituto de Pesquisa Econômica Aplicada. 2010. Technical Note: Estimativas do deficit habitacional brasileiro (2007–2011) por municípios (2010). http://www.ipea.gov.br /portal/images/stories/PDFs/nota _tecnica/130517_notatecnicadirur01.pdf. Galbany, Antoni. 2012. Luxury Hotel Under Construction in Vidigal. Rio on Watch, 12  July. http://riotimesonline.com / brazil-news/rio-real-estate/vidigal-may-see -major-luxury-hotel/. Galdo, Rafael. 2011. Rio é cidade com maior população em favelas do Brasil. http:// oglobo . globo .com / brasil /rio - a - cidade - com -maior -populacao - em -favelas - do -brasil-3489272. Galiani, Sebastian, and Ernesto Schargrodsky. 2004. Effects of Land Titling on Child Health. Economics and Human Biology 2 (3): 353–72. ———. 2010. Property Rights for the Poor: Effects of Land Titling. Journal of Public Economics 94: 700–729. ———. 2012. Land Property Rights and Resource Allocation. Journal of Law and Economics 54: 329–45. ———. 2014. Land Property Rights. In Institutions, Property Rights and Economic Growth: The Legacy of Douglass North, edited by S. Galiani and Itai Sened. New York: Cambridge University Press. Gans, Herbert. 1962. The Urban Villagers: Groups and Class in the Life of Italian Americans. New York: Free Press.

214

References

Giménez Mercado, Claudia; Mariela Rivas Gómez; and Juan Carlos Rodríguez Vásquez. 2008. Habilitación física de barrios en Venezuela: Análisis desde el enfoque de capacidades y crítica a la racionalidad instrumental. Cuadernos del Cendes, 69 (September–December). Glaeser, Edward. 2009. Slumdog Entrepreneurs. New York Times, 26  May. http:// economix.blogs.nytimes.com/2009/05/26/slumdog-entrepreneurs/. Glaeser,  E.  L., and  B.  A. Ward. 2009. The Causes and Consequences of Land Use Regulation: Evidence from Greater Boston. Journal of Urban Economics 65: 265–78. Glickfeld, M., and N. Levine. 1992. Regional Growth, Local Reaction: The Enactment and Effects of Local Growth Control and Management Measures in California. Cambridge, Mass.: Lincoln Institute of Land Policy. Gonzalez, Sidnel, ed. 2012. Indicadores socioeconômicos na UPPs do Estado do Rio de Janeiro. Rio de Janeiro: Fundação Getulio Vargas Projetos. No. 17. Gottschalch, Sören. 2013. Urbanization in China and How Urban Housing Demand Can Be Met. Working Paper, Institute for International Political Economy Berlin, No. 27. Gouverneur, David. 2014. Planning and Design for Future Informal Settlement: Shaping the Self-Constructed City. London: Routledge. Government of India. 2002. Tenth Five-Year Plan 2002–2007. New Delhi: Planning Commission. ———. 2012. Audit Report (Civil), Maharashtra for the Year 2010–11. New Delhi: Report of the Comptroller and Auditor General of India, Government of India. Government of India Planning Commission. 2011. Urban Development Management for the Formulation of the 12th Five-Year Plan. New Delhi: Government of India. Government of Maharashtra. 1971. The Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act. Bombay: Law and Judiciary Department, Government of Maharashtra. ———. 1997. Guidelines for the Implementation of Slum Rehabilitation Schemes in Greater Mumbai. Mumbai: Slum Rehabilitation Authority, Housing and Special Assistance Department, Government of Maharashtra. Goytia, C.; C. De Mendoza; and R. Pasquini. 2010. Land Regulation in the Urban Agglomerates of Argentina and Its Relationship with Households’ Residential Tenure Condition. Working Paper. Cambridge, Mass.: Lincoln Institute of Land Policy. Gramlich Edward. 1994. Infrastructure Investment: A Review Essay. Journal of Economic Literature 32 (3): 1176–96. Green, R. K.; S. Malpezzi; and K. Vandell. 1994. Urban Regulations and the Price of Land and Housing in Korea. Journal of Housing Economics 3 (4): 330–56. Gulyani, Sumila, and Genevieve Connors. 2002. Urban Upgrading in Africa: A Summary of Rapid Assessments in Ten Countries. World Bank’s Africa Infrastructure Department. http://web.mit .edu /urbanupgrading /upgrading /case-examples /overview-africa/country-assessments/download/10-CountrySummary.pdf.

References

215

Gupta, Prashant; Rajat Gupta; and Thomas Netzer. 2009. Building India Accelerating Infrastructure Project. Mumbai, India: McKinsey. Gyourko, J. E.; A. Saiz; and A. A. Summers. 2008. A New Measure of the Local Regulatory Environment for Housing Markets: The Wharton Residential Land Use Regulatory Index. Urban Studies 45 (3): 693–729. Handzic, K. 2010. Is Legalized Land Tenure Necessary in Slum Upgrading? Learning from Rio’s Land Tenure Policies in the Favela Bairro Program. Habitat International 34 (1): 11–17. Hansen, Thomas Blom. 2001. Wages of Violence: Naming and Identity in Postcolonial Bombay. Princeton: Princeton University Press. Heckman, James J., and Junjian Yi. 2012. Human Capital, Economic Growth, and Inequality in China Working Paper No. w18100. Cambridge, Mass.: National Bureau of Economic Research. Heller, Patrick. 2000. Degrees of Democracy: Some Comparative Lessons from India. World Politics 52 (4): 484–519. Helmke, G., and Steven Levitsky. 2004. Informal Institutions and Comparative Politics. Perspectives on Politics 2 (4): 725–40. Hirschman, Albert O. 1971. Bias for Hope: Essays on Development and Latin America. New Haven: Yale University Press. ———. 1984. Getting Ahead Collectively: Grassroots Experiences in Latin America. New York: Pergamon. Ho, P. 2013. In Defense of Endogenous, Spontaneously Ordered Development: The Institutional Structure of China’s Rural Urban Property Rights. Journal of Peasant Studies 40 (6): 1–32. Ho, P., and M. Spoor. 2006. Whose Land? The Political Economy of Land Titling in Transitional Economies. Land Use Policy 23: 580–87. Houtzager, Peter Pim. 2005. Introduction. In Changing Paths: International Development and the New Politics of Inclusion, edited by Peter Houtzager and Mick Moore, 1–32. Ann Arbor: University of Michigan Press. Howard, Ebenezer. 1902. Garden Cities of To-Morrow. London: S. Sonnenschein. Hurrell, Fiona. 2011. Rio Favela Population Largest in Brazil. Rio Times, 23 December. http://riotimesonline.com/ brazil-news/rio-politics/rios-favela-population-largest -in-brazil/. Hustwit, Gary, director. 2011. Urbanized. Czech Republic: Aerofi lms. ILO. 2013. Global Wage Report. http://www.ilo.org/wcmsp5/groups/public/—dgreports /—dcomm/—publ/documents/publication/wcms _194843.pdf. Ingram, Gregory, and Christine Kessides. 1994. Infrastructure for Development. Finance and Development 31: 18–21. Isacson, Adam. 2011. Rio de Janeiro’s Pacification Program—Security Programs in Rio de Janeiro. Washington, D.C.: Washington Office on Latin America. January. Isensee, Patrick. 2014. Reflections on Gentrification in Vidigal. RioOnWatch, January 31. http://rioonwatch.org /?p =13032.

216

References

Jacobs, Jane. 1961. The Death and Life of Great American Cities. New York: Random House. Jansen, Thiago. 2012. Procura por imóveis cresce, preços sobem, e especialistas alertam para riscos. O Globo, 24 November. http://oglobo.globo.com/blogs/prosa/posts /2012/11/24/invasao-estrangeira-na-favela-476302.asp. Jimenez, Emmanuel. 1983. The Magnitude and Determinants of Home Improvement in Self-Help Housing: Manila’s Tondo Project. Land Economics 59 (1): 70–83. Jin, Yinghua; Jenny Ligthart; and Mark. Rider. 2011. The Evolution of Fiscal Decentralization in China and India: A Comparative Study of Design and Performance. Journal of Emerging Knowledge on Emerging Markets 3: 553–80. Johnson, Ian. 2013. China Great Uprooting: Moving 250 Million into Cities. New York Times, 13  June. http://www.nytimes.com /2013/06/16/world /asia /chinas-great -uprooting-moving-250-million-into-cities.html?hp. ———. 2014. China Releases Plan to Incorporate Farmers into Cities, New York Times, 17 March. http://www.nytimes.com/2014/03/18/world/asia/china-releases-plan-to -integrate-farmers-in-cities.html. Jordan, David P. 1995. Transforming Paris: The Life and Labors of Baron Haussmann. New York: Simon and Schuster. Jumani, Usha. 1991. Dealing with Poverty: Self-Employment for Poor Rural Women. New Delhi: Sage. Junhua, Lu; Peter Rowe; and Zhang Jie. 2001. Modern Urban Housing in China: 1840– 2000. Munich: Prestel. Kaviraj, Sudipta. 1988. A Critique of the Passive Revolution. Economic and Political Weekly 23: 2429–44. Keare, Douglas H., and Emmanuel Jimenez. 1983. Progressive Development and Affordability in the Design of Urban Shelter Projects. World Bank Staff Working Papers, Number 560. Washington, D.C.: World Bank. Kerkar, Ajit. 1981. Report of the High Power Steering Group for Slums and Dilapidated Houses. Bombay: Government of Maharashtra. Kohli, Atul. 1987. The State and Poverty in India: The Politics of Reform. Cambridge: Cambridge University Press. Kok, N.; P. Monkkonen; and J. M. Quigley. 2010. Economic Geography, Jobs, and Regulations: The Value of Land and Housing. Berkeley Program on Housing and Urban Policy, Working Paper W10-005. Berkeley, Calif. Kumar, Manoj, and Rajesh Kumar Singh. 2013. Indian Row over Poverty and Policy Extends to Harvard and Columbia. Reuters, August 3. http://www.reuters.com /article/2013/08/03/us-india-poverty-idUSBRE97203820130803. Kundu, Amitabh. 1990. Housing No Hope for the Poor. Economic and Political Weekly 25 (31), August 4: 1709–11. La Porta, R.; F. Lopez de Silanes; A. Shleifer; and R. W. Vishny. 1997. Legal Determinants of External Finance. Journal of Finance 52 (3): 1131–50.

References

217

LandScan Global. 2011. High Resolution Global Population Data. UT-Battelle, LLC, Oak Ridge National Laboratory, with the U.S. Department of Energy. Washington, D.C. Lanjouw, Jean, and Philip Levy. 2002. Untitled: A Study of Formal and Informal Property Rights in Urban Ecuador. Economic Journal 112: 986–1019. Le Corbusier. 1996. A Contemporary City. In The City Reader, 5th Edition, edited by Richard T. LeGates and Frederic Stout. New York: Routledge. Lewis, Clara. 2011. With No Proof, Dharavi Tenants Have Nowhere to Go. Times of India, 17 December. Li, Lixing. 2011. The Incentive Role of Creating “Cities” in China. China Economic Review 22 (1): 172–81. Li, Tania Murray. 2012. What Is Land? Anthropological Perspectives on the Global Land Rush. Paper presented at the International Conference on Global Land Grabbing II, October 17–19. Orga nized by the Land Deals Politics Initiative (LDPI) and hosted by the Department of Development Sociology at Cornell University, Ithaca, NY. Liang, Zai, and Zhongdong Ma. 2004. China’s Floating Population: New Evidence from the 2000 Census. Population and Development Review 30 (3): 467–88. Livingstone, Grace. 2004. Inside Colombia: Drugs, Democracy, and War. New Brunswick, N.J.: Rutgers University Press. Logan, John, and Harvey Molotch. 1987. Urban Fortunes: The Political Economy of Place. Berkeley: University of California Press. Logan, John. R.; Yiping Fang; and Zhanxin Zhang. 2009. Access to Housing in Urban China. International Journal of Urban and Regional Research 33 (4): 914–35. Lonardoni, F., and J. C. Bolay. 2013. Informal Rental Markets and Livelihoods: Housing as a Productive Asset for Landlords in Brazilian Favelas. In At Home in the Housing Market: RC43 Conference Book of Proceedings, edited by R. Ronald. University of Amsterdam, Centre of Urban Studies. http://rc43-conference.uva .nl /programme/workshops/workshops.html. Magalhães, Alex Ferreira. 2010. Mercado imobiliário em favelas: Procedimentos de transmissão de imóveis e de formalização da propriedade. 10th International Conference of the Latin American Real Estate Society, September 15–17, São Paulo, Brazil. Mahadevia, Darshini. 2006. Urban Infrastructure Financing and Delivery in India and China. China and World Economy 14 (2): 105–20. Mahajan, Sharad. 2009. Shelter Security Status in Dharavi. Paper presented at workshop on Social Security and Social Protection for the Urban Poor and Migrants in Asia, February 11–13, Ahmedabad, India. Maia, M. L. 1995. Land Use Regulations and Rights to the City: Squatter Settlements in Recife, Brazil. Land Use Policy 12 (2): 177–80. Malpezzi, Stephen. 2011. Urban Growth and Development at Six Scales. In Global Urbanization, edited by Eugenie Birch and Susan Wachter, 67–85. Philadelphia: University of Pennsylvania Press.

218

References

Malpezzi, Stephen, and Stephen K. Mayo. 1987. User Cost and Housing Tenure in Developing Countries. Journal of Development Economics 25 (1): 197–220. ———. 1997. Getting Housing Incentives Right: A Case Study of the Effects of Regulation, Taxes, and Subsidies on Housing Supply in Malaysia. Land Economics 73 (3): 372–91. Maricato, Erminia. 2010. The Statute of the Peripheral City. In The City Statute of Brazil: A Commentary, edited by Celso Carvalho and Ana Claudia Rossbach. São Paulo: Ministry of Cities; Cities Alliance. Mathur, Mukesh P. 2007. Impact of the Constitution (74th Amendment) Act on the Working of Urban Local Bodies. New Delhi: NIUA.  McKinsey. 2010. Comparing Urbanization in China and India. http://www.mckinsey .com/insights/urbanization/comparing _urbanization _in _china _ and _india. McKinsey Global Institute. 2010. India’s Urban Awakening: Building Inclusive Cities Sustaining Economic Growth. Mumbai and New York: McKinsey and Company. Mehta, Suketu. 2004. Maximum City: Bombay Lost and Found. New York: Knopf/ Random House. Meinzen-Dick, Ruth, and Esther Mwangi. 2009. Cutting the Web of Interests: Pitfalls of Formalizing Property Rights. Land Use Policy 26 (1): 36–43. MHADA. 1993. Prime Minister’s Grant Project: An Appraisal. Bombay: Maharashtra Housing and Area Development Authority. MHUPA (Ministry of Housing and Urban Poverty Alleviation, Government of India). 2011. Guidelines for Slum-Free City Planning, Rajiv Awas Yojana (RAY). http:// mhupa.gov.in/w_new/RAY%20Guidelines-%20English.pdf. Miceli, T. J.; C. F. Sirmans; and G. K. Turnbull. 2000. The Dynamic Effects of Land Title Systems. Journal of Urban Economics 47 (3): 370–89. Mishra, Pankaj. 2013. India’s Path to Prosperity Doesn’t Run Th rough Cities. Bloomberg View, August 8. www.bloomberg.com /news/2013- 08 -11/india-s-path-to -prosperity-doesn-t-run-through-cities.html. Monkkonen, P. 2013. Urban Land-Use Regulations and Housing Markets in Developing Countries: Evidence from Indonesia on the Importance of Enforcement. Land Use Policy 34: 255–64. Monkkonen, Paavo, and Lucas Ronconi. 2013. Land-Use Regulations, Compliance and Land Markets in Argentina. Urban Studies 50 (10): 1951–69. Morss, Elliott R. 1984. Institutional Destruction Resulting from Donor and Project Proliferation in Sub-Saharan African Countries. World Development 12 (4): 465–70. Moser, Caroline. 1989. Gender Planning in the Th ird World: Meeting Practical and Strategic Gender Needs. World Development 17 (11): 1799–825. Mukesh Mehta Consultants. 2010. Dharavi Redevelopment Project. Presented at Council on Tall Buildings and Urban Habitats Conference on Remaking Sustainable Cities in a Vertical Age, Mumbai. Mukhija, Vinit. 2001a. Enabling Slum Redevelopment in Mumbai: Policy Paradox in Practice. Housing Studies 16 (6): 791–806.

References

219

———. 2001b. Upgrading Housing Settlements in Developing Countries: The Impact of Existing Physical Conditions. Cities: The International Journal of Urban Policy and Planning 18 (4): 213–22. ———. 2002a. New Houses for Old in Mumbai: An Attractive but Problematic Strategy. International Development Planning Review 24 (2): 161–76. ———. 2002b. An Analytical Framework for Urban Upgrading: Property Rights, Property Values and Physical Attributes. Habitat International 26 (4): 553–70. ———. 2003. Squatters as Developers? Slum Redevelopment in Mumbai. Surrey: Ashgate. ———. 2004. How Is Housing Financed? The Case of a Group of Tenants Who Became Property Developers in Mumbai, India. International Development Planning Review 26 (3): 257–74. ———. 2006. Property Readjustment and a Tenants’ Cooperative in Mumbai: Some Lessons and Questions. Environment and Planning A 38 (11): 2157–71. ———. 2014. Outlaw In-Laws: Informal Second Units and the Stealth Reinvention of Single-Family Housing. In The Informal City, edited by Vinit Mukhija and Anastasia Loukaitou-Sideris, 39–58. Cambridge, Mass.: MIT Press. Mumbai Transformation Support Unit. Collusion, Conflicts, Informal Systems, & Rent Seeking: The Great Prototype Indian Story of Urban Land Management in Mumbai. http://www.visionmumbai.org/images/projects/Document_Political%20Economy%20of%20Mumbai%20Land031313112359.pdf. Municipal Corporation of Greater Mumbai. 2010. Mumbai Human Development Report 2009. New Delhi: Oxford University Press. National Skill Development Corporation. 2009. Human Resource and Skill Requirements in Building, Construction Industry and Real Estate Ser vices. New Delhi: NSDC. http://www.nsdcindia.org /pdf/ bldg-const-real-estate.pdf. Nayar, Sameer. 1996. The Indian Real Estate Market: A Comprehensive Analysis for the Foreign Investor. Master of Science in Real Estate Development, thesis. Cambridge, Mass.: Massachusetts Institute of Technology. Neri, Marcelo Cortes. 2011. UPP2 e a economia da Rocinha e do Alemão: Do choque de ordem ao de progresso. Centro de Políticas Sociais—Fundação Getulio Vargas, November 22. North, Douglass. 1990. Institutions, Institutional Change and Economic Per formance. Cambridge: Cambridge University Press. ———. 2005. Understanding the Process of Economic Change. Princeton: Princeton University Press. Ost, Sabrina Marinho. 2012. O mercado sobe a favela: Um estudo sobre o Santa Marta pós-UPP. Master’s thesis. Rio de Janeiro: Fundação Getulio Vargas. Ostrom, Elinor. 2000. Collective Action and the Evolution of Social Norms. Journal of Economic Perspectives 14 (3): 137–58. Paiva, Anabela. 2013. OsteRio Debates Gentrification and Regulation of Property Markets in Rio’s Favelas. RioOnWatch, December 13. http://rioonwatch.org /?p =12709.

220

References

Panwalkar, Pratima. 1996. Upgradation of Slums: A World Bank Programme. In Bombay: Metaphor for Modern India, edited by Sujata Patel and Alice Thorner, 121–42. New Delhi: Oxford University Press. Patel, Sheela. 2013. Upgrade, Rehouse or Resettle? An Assessment of the Indian Government’s Basic Ser vices for the Urban Poor (BSUP) Programme? Environment and Urbanization 25 (1): 177–88. Patel, Sheela, and Jockin Arputham. 2008. Plans for Dharavi: Negotiating a Reconciliation Between a State-Driven Market Redevelopment and Residents’ Aspirations. Environment and Urbanization 20 (1): 243–53. Paulsen, K. 2013. The Effects of Growth Management on the Spatial Extent of Urban Development, Revisited. Land Economics 89 (2): 193–210. Payne, Geoff rey, ed. 2002. Law Land, Rights and Innovation: Improving Tenure Security for the Urban Poor. London: ITDG. ———. 2004. Land Tenure and Property Rights: An Introduction.  Habitat International 28 (2): 167–79. Peattie, Lisa. 1979. Housing Policy in Developing Countries: Two Puzzles. World Development 7 (11): 1017–22. Perlman, Janice. 1976. The Myth of Marginality: Urban Poverty and Politics in Rio de Janiero. Berkeley: University of California Press. ———. 2010a. It All Depends: Buying and Selling Houses in Rios Favelas. Washington, D.C.: International Housing Coalition. ———. 2010b. Favela: Four Decades of Living on the Edge in Rio de Janiero. Oxford University Press. Pollak, Robert A. 2003. Gary Becker’s Contributions to Family and Household Economics. Review of Economics of the Household 1 (1–2): 111–41. Portes, Alejandro; Manuel Castells; and Lauren A. Benton, eds. 1989. The Informal Economy: Studies in Advanced and Less Developed Countries. Baltimore: Johns Hopkins University Press. Pradhan, Kanhu Chandra. 2012. Unacknowledged Urbanization: The New Census Towns of India. New Delhi, Center for Policy Research Working Paper. Prud’Homme, Rémy. 2005. Infrastructure and Development. Annual World Bank Conference on Development Economics, Washington, D.C. June, pp. 153–89. Pugh, Cedric. 1990. Housing and Urbanisation: The Case of India. New Delhi: Sage, India. Quigley, J. M.; S. Raphael; and L. A. Rosenthal. 2008. Measuring Land-Use Regulations and Their Effects in the Housing Market. Working Paper No. W08-004, Berkeley Program on Housing and Urban Policy. Berkeley, Calif. ———. 2009. Mea sur ing Land-Use Regulation: An Examination of the San Francisco Bay Area, 1992–2007. InHousing Markets and the Economy: Risk, Regulation, and Policy: Essays in Honor of Karl  E. Case, edited by  E.  L. Glaesar and  J.  M. Quigley, 271–300. Cambridge, Mass.: Lincoln Institute of Land Policy.

References

221

Rao, M. Govinda, and Richard M. Bird. 2011. Coping with Change: The Need to Restructure Urban Governance and Finance in India. No. 04. University of Toronto, Institute on Municipal Finance and Governance. Reserve Bank of India. 2007. Municipal Finance in India: An Assessment. New Delhi: Government of India. Ribeiro, Flávia. 2013. Brazil: Five Years of UPPs. Infosurhoy, Law Enforcement, Brazil, December 16. http://infosurhoy.com/en_GB/articles/saii/features/main/2013/12/16 /feature- 01. Richardson, Harry W. 1987. Whither National Urban Policy in Developing Countries? Urban Studies 24: 227–44. Rio de Janeiro’s “Favelas” Transform from Slums to Real Estate Hot Spots. 2013. Fox News Latino, 13 January. http://latino.foxnews.com/latino/news/2013/01/13/rio-de -janieros-favelas-transform-from-slums-to-real-estate-hot-spots/. Risbud, Neelima. 2003. The Case of Mumbai, India. Understanding Slums: Case Studies for the Global Report on Human Settlements. http://www.ucl.ac.uk /dpu-projects /Global _ Report/pdfs/Mumbai.pdf. Roberts, Bryan R. 1973. Organizing Strangers. Austin: University of Texas Press. Rodgers, Gerry, ed. 1989. Urban Poverty and the Labor Market: Access to Jobs and Incomes in Asian and Latin American Cities. Geneva: International Labor Office. Rodwin, Lloyd, ed. 1987. Shelter, Settlement and Development. Boston: Allen and Union. Romero, Simon. 2013. Now Taking World Cup Bookings, Rio’s Slums. New York Times, 21 December. http://mobile.nytimes.com/2013/12/22/world/americas/now-taking -world-cup-bookings-rios-slums.html. Roweis, Shoukry. 1981. Urban Planning in Early and Late Capitalist Societies: Outline of a Theoretical Perspective. In M. Dear and A. J. Scott, eds., Urbanization and Urban Planning in Capitalist Society. London: Methuen. Ruparel, Anshumali. 2013. Dharavi Development Project Inches Ahead. Indian Express, 10 August. Saiz, A. 2010. The Geographic Determinants of Housing Supply. Quarterly Journal of Economics 125: 1253–96. Sanyal, Bishwapriya. 1986. Learning Before Doing: A Critical Analysis of the Privatization Concept in Shelter Policies of International Institutions. Open House International 11 (4): 13–21. ———. 1987. Problems of Cost-Recovery in Development Projects: Experience of the Lusaka Upgrading and Site/Ser vice Projects. Urban Studies 24: 285–95. Sanyal, Bishwapriya, and Chandan Deuskar. 2012. A Better Way to Grow? Town Planning Schemes as a Hybrid Land Readjustment Process in Ahmedabad, India. In Value Capture and Land Policies, edited by G. K. Ingram and Y. Hong, 149–82. Boston: Lincoln Institute of Land Policy. Sanyal, Bishwapriya, and Mona Fawaz. 2007. The Transformation of an Olive Grove: An Institutional Perspective from Beirut, Lebanon. In  Planning and Institutions, edited by N. Verma, 207–28. Amsterdam: Elsevier Science.

222

References

Sanyal, Bishwapriya, and Vinit Mukhija. 2001. Institutional Pluralism and Housing Delivery: A Case of Unforeseen Conflicts in Mumbai, India. World Development 29 (12): 2043–57. Sathe, Dhanamjiri. 2011. Political Economy of Land and Development in India. Economic and Political Weekly 46 (29): 151–55. Schon, Donald A. 1987. Institutional Learning in Shelter and Settlement Policies. In Shelter, Settlement, and Development, edited by  L. Rodwin, 360–401. Boston: Allen & Unwin. Scott, Allen John. 1980. The Urban Land Nexus and the State. London: Pion. Scruggs, Greg, and Arthur Acoca-Pidolle. 2013. Rio de Janeiro Residents Associations and Recent Favela Real Estate Trends. Working Paper. Cambridge, Mass.: Lincoln Institute of Land Policy. Seelig, Michael Y. 1978. The Architecture of Self-Help Communities: The First International Design Competition for the Urban Environment of Developing Countries. New York: Architectural Record Books. Sen, Amartya. 2013. Why India Trails China. New York Times, June 19. www.nytimes .com/2013/06/20/opinion/why-india-trails-china.html. Sharma, India. 2012. Adverse Possession. LegalIndia .com, March  10. http://www .legalindia.com/adverse-possession/. Shaw, George Bernard. 1903. The Revolutionist’s Handbook. Cambridge, Mass.: University Press.Shen, Jianfa. 2013. Increasing Internal Migration in China from 1985 to 2005: Institutional Versus Economic Drivers. Habitat International 39: 1–7. Sicular, Terry; Yue Ximing; Bjorn Gustafsson; and Li Shi. 2007. The Urban–Rural Income Gap and Inequality in China. Review of Income and Wealth 53 (1): 93–126. Smets, Peer. 1997. Private Housing Finance in India: Reaching Down-Market? Habitat International 21 (1): 1–15. Smith, Neil. 1987. Gentrification and the Rent Gap. Annals of the Association of American Geographers 77 (3): 462–65. Sone, Mayumi. 2014. President to the Institute of Land and Cartogrophy of the State of Rio (ITERJ). Rio Times, January 15–21. Riotimesonline.com. Special Interest Group in Urban Settlement (SIGUS), School of Architecture and Planning, MIT. 2014. Favela-Bairro Project, Brazil. Upgrading Urban Communities—A Resource Framework website. http://web.mit.edu/urbanupgrading/upgrading /case-examples/ce-BL-fav.html. Sridhar, K. S. 2010. Impact of Land Use Regulations: Evidence from India’s Cities. Urban Studies 47 (7): 1541–69. Srinivas,  M.  N. 1987. The Dominant Caste and Other Essays. New Delhi: Oxford University Press. Steele, Francesca. 2013. Brazil Property: Buyers Target Homes in Rio’s “Pacified” Favelas. Financial Times, September  13. http://www.ft.com/cms/s/2/5a4c57ea-1612 -11e3-a57d- 00144feabdc0.html#ixzz2honCmzWG.

References

223

Steiker-Ginzberg, Kate. 2013. Vila Autódromo People’s Plan Wins Deutsche Bank Urban Age Award. RioOnWatch, December 20. http://www.rioonwatch.org/?page_id =14992. Straub, Stephane. 2008. Infrastructure and Growth in Developing Countries: Recent Advances and Research Challenges. Policy Research Working Paper 4460. Washington, D.C.: World Bank. Struyk, R. J.; M. L. Hoff man; and Katsura, H. M. 1990. The Market for Shelter in Indonesian Cities. Washington, D.C.: Urban Institute. Su, Ming and Zhao Quanhou. 2006. The Fiscal Framework and Urban Infrastructure Finance in China. Washington, D.C.: World Bank Publications. ———. 2007. China: Fiscal Framework and Urban Infrastructure Finance. In Financing Cities, edited by G. Peterson and P. Clark Annez, 74–107. Washington, D.C.: Sage. Sugden, Joanna, 2013. Why India Has a “Sand Mafia.” Wall Street Journal, 6 August. http://blogs.wsj.com/indiarealtime/2013/08/06/why-india-has-a-sand-mafia/. Sundaram, Pachampet Sabhesa Aiyar. 1989. Bombay: Can It House Its Millions? New Delhi: Clarion. Taschner, Suzana Pasternak. 2003. O Brasil e suas favelas. In A cidade da informalidade, edited by Pedro Abramo. Rio de Janeiro: Livraria Sette Letras/ FAPERJ. Tendulkar, Suresh D. 2003. Employment Growth in Factory Manufacturing Sector During Pre- and Post-Reform Periods. Paper presented at the NBER-NCAER Annual Conference on Indian Economy, New Delhi December. Tiebout, Charles M. 1956. A Pure Theory of Local Expenditures. Journal of Political Economy 64 (5): 416–24. Times of India. 1990. Thackeray’s Housing Plan Unrealistic. August 11, Mumbai. ———. 1991. Extra FSI for Social Ser vice Bodies. February 21, Mumbai. ———. 2000. Maharashtra Government Scraps Slum Scheme. March 12, Mumbai. ———. 2001. Slum Redevelopment Projects Likely to Get a Boost. March 21, Mumbai. Turner, John F. C. 1967. Barriers and Channels for Housing Development in Modernizing Countries. Journal of the American Institute of Planners 34: 354–63. ———. 1968. Housing Priorities, Settlement Patterns, and Urban Development in Modernizing Countries. Journal of the American Institute of Planners 34 (6): 354–63. ———. 1972. Housing as a Verb. In Freedom to Build: Dweller Control of the Housing Process, edited by John F. C. Turner and Robert Fichter, 148–75. New York: Macmillan. ———. 1976. Housing by People: Towards Autonomy in Building Environments. London: Marion Boyars. ———. 1979. Housing in Three Dimensions: Terms of Reference for the Housing Question Redefined. In The Urban Informal Sector: Critical Perspectives on Employment and Housing Policies, edited by R. Bromley, 1135–46. Oxford: Pergamon. UN-Habitat. 2003. The Challenge of Slums: Global Report on Human Settlements 2003. London: Earthscan (for United Nations Human Settlements Program).

224

References

———. 2005. The Legacy of Urban Management Program. Habitat Debate 11 (4). ———. 2012. State of Latin American and Caribbean Cities. Nairobi: UN-Habitat. ———. 2013. Revised Compilation for Sustainable Cities and Human Settlements, https://sustainabledevelopment .un .org /content /documents /2913Revised%20 Cities%20SDG%20Compilation%2020%20Dec%202013.pdf. UNCHS/World Bank. 1992. The Housing Indicators Program: Extensive Survey, Preliminary Results. Washington, D.C.: World Bank. UNDP, World Population Prospects. 2009 Revision. Data retrieved June 14, 2013, from UN Online database, http://www.un.org /esa /population /publications/wpp2008 /wpp2008 _ highlights.pdf. UNHCR. 2010. Update on UNHCR’s Global Programs and Partnerships. 2014, http:// www.unhcr.org /4ca5deb59.pdf. ———. 2011 Revision. Data retrieved June 14, 2013, from UN Online database, http:// esa.un.org /wpp/ppt/CSIS/WUP_ 2011_CSIS _4.pdf. United Nations, DESA, Population Division. 2005. World Urbanization Prospects: The 2005 Revision. New York: United Nations Publications. United Nations Secretariat, Department of Economic and Social Affairs. 2013. World Economic and Social Survey 2013: Sustainable Development Challenges. http:// w w w . un . org /en /development /desa / policy / wess / wess _ current / wess2013 /WESS2013.pdf. Van der Linden, Jan. 1986. The Sites and Ser vices Approach Reviewed: Solution or Stopgap to the Third Word Housing Shortage. Gower, Vt.: Gower. Vanaik, Achin. 1990. The Painful Transition: Bourgeois Democracy in India. London: Verso. Vulliamy, Ed. 2013. Medellín, Colombia: Reinventing the World’s Most Dangerous City. Observer, June 8. http://www.theguardian.com /world /2013/jun /09/medellin -colombia-worlds-most-dangerous-city. Watson, Vanessa. 2007. Urban Planning and Twenty-First Century Cities: Can It Meet the Challenge? In Global Urban Poverty: Setting the Agenda, edited by A.M. Garland, M. Massoumi, and B.A. Ruble, 205–37 Washington, D.C.: Woodrow Wilson International Center for Scholars. Weingast, Barry R. 2009. Second Generation Fiscal Federalism: The Implications of Fiscal Incentives. Journal of Urban Economics 65 (3): 279–93. Weinstein, Liza. 2008. Mumbai’s Development Mafias: Globalization, Organized Crime and Land Development. International Journal of Urban and Regional Research 32 (1): 22–39. Werlin, Herbert. 1999. The Slum Upgrading Myth. Urban Studies 36 (9): 1523–34. Whitehead, Christine, and Kathleen Scanlon, eds. 2008. Social Housing in Europe, vol. II. London: London School of Economics and Political Science. Wissink, Bart. 2013. Enclave Urbanism in Mumbai: An Actor-Network-Theory Analysis of Urban (Dis)Connection. Geoforum 47 (1): 1–11.

References

225

Woodbury, Coleman. 1953. The Future of Cities and Urban Redevelopment. Chicago: University of Chicago Press.World Bank. 1975. The Task Ahead for the Cities of Developing Countries. Proposed by G. Beier, A. Churchill, M. Cohen, and B. Renaud, World Bank Staff Working Paper No. 209. Washington, D.C.: World Bank. ———. 1993. Housing: Enabling Markets to Work. Washington, D.C.: World Bank. ———. 1994. World Development Report 1994: Infrastructure for Development. New York: Oxford University Press. ———. 1997. Implementation Completion Report (Bombay Urban Development Project). Washington, D.C.: World Bank. ———. 2012a. Doing Business Indicators. www.doingbusiness.org. ———. 2012b. World Development Indicators. http://wdi.worldbank .org /table/4.2#. ———. 2013. Urbanization Beyond Municipal Boundaries: Nurturing Metropolitan Economies and Connecting Peri-Urban Areas in India. https://openknowledge .worldbank .org / bitstream/handle/10986/13105/757340PUB0EPI0001300pubdate 02021013.pdf ?sequence =1. ———. 2014. Urban China Toward Efficient, Inclusive, and Sustainable Urbanization. http://www.worldbank .org /en /country/china /publication /urban-china-toward -efficient-inclusive-sustainable-urbanization. World Bank Development New Archives. 2000. Peru’s Urban Poor Gain Access to Property Markets, February 2. World Bank.Xinhua. 2014. China Unveils Landmark Urbanization Plan. http://news.xinhuanet.com/english/china/2014- 03/16/c _133190495.htm. Yeh, A. 2011. Urban Growth and Spatial Development in China. In Global Urbanization, edited by Eugenie Birch and Susan Wachter, 48–85. Philadelphia: University of Pennsylvania Press. Yuan, Chen. 2005. Development Financing and China’s Urbanization. http://www.cdb .com.cn/meeting /english/09/09_ 001.htm. Yunus, Muhammad. 1999. Banker to the Poor. New York: Public Affairs. YUVA. 1999. Our Home Is a Slum: An Exploration of a Community and Local Government Collaboration in a Tenants’ Struggle to Establish Legal Residency. YUVA Discussion Paper No. 107, August. Mumbai: YUVA. Zaidi, S. Hussain. 2012. Dongri to Dubai: Six Decades of the Mumbai Mafia. New Delhi: Roli. Zheng, Siqi; Matthew Kahn; and Hongyu Liu. 2010. Towards a System of Open Cities in China: Home Prices, FDI Flows and Air Quality in 35 Major Cities. Regional Science and Urban Economics 40 (1): 1–10. Zhu, Jieming. 2012. Governance over Land Development During Rapid Urbanization Under Institutional Uncertainty. IRES Working Paper Series 2012-028 Singapore: NUS.

This page intentionally left blank

CON TRIBU TOR S

Arthur Acolin is a doctoral student in urban planning and development at the University of Southern California with a broad interest in housing economics and a focus on international housing policy and finance. Before starting his Ph.D. studies, he was a research associate at the Penn Institute for Urban Research (Penn IUR) working on housing, urbanization, and economic development issues. Sai Balakrishnan is an assistant professor in urban planning at the Graduate School of Design, Harvard University. Previously, she was an assistant professor at Rutgers University and a postdoctoral scholar at the Center on Global Legal Transformation at Columbia Law School. She holds a master’s in city planning from the Massachusetts Institute of Technology and a Ph.D. in urban planning from Harvard University. Her research interests include property rights and urban land markets, urban informality, infrastructureled development, and institutions for managing rapid urbanization. Balakrishnan has worked as an urban planner in India, the United States, and the United Arab Emirates, and as a consultant to UN-HABITAT, Nairobi. She is currently working on a book manuscript on India’s rapid urbanization along highway corridors, tentatively titled “Becoming highway modern: Agrarian pasts in India’s urban futures.” Eugenie L. Birch is Lawrence C. Nussdorf Professor of Urban Research and Education, chair of the Graduate Group in City and Regional Planning, and codirector of Penn Institute for Urban Research (Penn IUR). She has been active in the field of city planning’s professional organizations and in academia in the United States and abroad. In 2000, she was elected to the College of Fellows of the American Institute of Certified Planners and made an honorary member of the Royal Town Planning Institute. She has been a member of the Planning Accreditation Board, serving as its chair from 2004 to

228

Contributors

2006. She has been president of the Association of Collegiate Schools of Planning; president of the Society of American City and Regional Planning History; and coeditor of the Journal of the American Planning Association. José Brakarz has over twenty years’ experience working at the Inter-American Development Bank as a specialist in urban and municipal development, housing, and slum upgrading. He has an M.A. and a Ph.D. in city planning from the University of California, Berkeley, and a B.A. in public administration from the Getulio Vargas Foundation, Brazil. Shahana Chattaraj is a postdoctoral research fellow in comparative public policy at the Blavatnik School of Government, Oxford University. Her research interests are located at the intersection of globalization, development, and urban transformation in the developing world. Her research focuses on urban political economy, governance and policy in Asian megacities, the informal economy, and emerging patterns of sociospatial inequality within cities. She is currently working on a book on urban restructuring in Mumbai and Shanghai. Chattaraj holds a Ph.D. in public affairs from Princeton University, a master’s degree in city planning from the Massachusetts Institute of Technology, and a bachelor’s degree in architecture from the School of Planning and Architecture in New Delhi. Before coming to the Blavatnik School, she taught at the University of Pennsylvania, where she was a postdoctoral scholar at the  Lauder Institute. Chattaraj has worked for several years with the United Nations Population Fund, consulted with the World Bank, and worked in a community development organization in Delhi. Sebastian Galiani is a professor of economics at the University of Maryland and a visiting professor at Universidad de San Andres, Argentina. He is a fellow of the National Bureau of Economic Research (NBER) and Bureau for Research and Economic Analysis of Development (BREAD) and a member of the executive committee of Abdul Latif Jameel Poverty Action League (J-PAL) at MIT. He also serves as Scientific Director of J-PAL Latin America and Caribbean (J-PAL LAC). Galiania obtained his Ph.D. in economics from Oxford University and works broadly in the field of development economics. He is associate editor of the Journal of Development Economics, Economics, Behavior and Organization, and Latin American Economic Review. He has published papers in American Economic Review, Journal of Political Economy, Quarterly Journal of Economics, American Economic Journal: Applied

Contributors

229

Economics, American Economic Journal: Economic Policy, Review of Economics and Statistics, Journal of Public Economics, Journal of Development Economics, Journal of International Economics, Journal of Law and Economics, Journal of Public Economic Theory, and Labour Economics, among others. His work has been featured in Science, the Economist, the Wall Street Journal, the Times, and various other newspapers around the world. Galiani has also worked as a consultant for the Gates Foundation, the United Nations, the Inter-American Development Bank, Innovations for Poverty Action, the World Bank, and several governments around the world. David Gouverneur is associate professor of practice in landscape architecture in the School of Design at the University of Pennsylvania. He was chair of the School of Architecture at Universidad Simón Bolívar (1987–91), as well as a professor in the school’s Departments of Architecture and City and Regional Planning from 1980 to 2008. From 1991 to 1994, he was the director and from 1995 to 1996 the adjunct secretary of urban development of Venezuela. He was cofounder and professor of the Urban Design Program and director of the Mayor’s Institute in Urban Design at Universidad Metropolitana, created with the support of Harvard University, in Caracas, Venezuela (1996–2008). His professional practice focuses on urban plans and projects for historic districts, the rehabilitation of areas affected by extraordinary natural events, new centralities and mixed-use districts, improvement of informal settlements, and tourism-recreational areas.  Yvonne Mautner is lecturer and researcher of the Faculty of Architecture and Planning of the University of São Paulo (FAUUSP). The focus of her work is research on low-income housing. She is a founding member of the research center Production and Language of the Built Environment (NAP/PLACFAUUSP) and earned her Ph.D. (“The periphery as a frontier for the expansion of capital”) at the Bartlett School of Architecture and Planning at University College London. Paavo Monkkonen is assistant professor in the Department of Urban Planning at the University of California, Los Angeles, Luskin School of Public Affairs, where he teaches courses on housing markets and policy, applied microeconomics, research methods, and global urban segregation. His research focuses on five areas: housing policy with an emphasis on low-income housing; the role of finance, policy, and economic development in the changing

230

Contributors

spatial structures of cities; land-use regulations and their impacts on housing markets; the regularization of informally developed neighborhoods; and property taxation. This research is international in scope, having covered Argentina, Brazil, China, Hong Kong, India, Indonesia, Mexico, and the United States. Vinit Mukhija is associate professor of urban planning in the Luskin School of Public Affairs at the University of California, Los Angeles. His research focuses on informal housing and slums in developing countries and Third World–like housing conditions (including colonias, unpermitted trailer parks, and illegal garage apartments) in the United States. He is particularly interested in understanding the nature and necessity of informal housing, and strategies for upgrading and improving living conditions in unregulated housing. His work also examines how planners and urban designers in both developing and developed countries can learn from the everyday and informal city. He is the author of Squatters as Developers? Slum Redevelopment in  Mumbai (2003) and coeditor of The Informal American City: Beyond Taco Trucks and Day Labor (2014). Janice E. Perlman is president of the Mega-Cities Project, which she founded in 1988 to shorten the lag time between ideas and implementation in urban problem solving. Winner of a Guggenheim Award, she has been a tenured professor of city and regional planning at the University of California, Berkeley; a visiting professor of urban planning at Columbia University; and a senior research scholar at New York University. Perlman’s recent book, Favela: Four Decades of Living on the Edge in Rio de Janeiro (Oxford University Press), won the 2010 PROSE Award for best book of the year in two categories: Excellence in the Social Sciences and Outstanding Contribution to the Field of Sociology and Social Work.  Her 1976 book, The Myth of Marginality (University of California Press), won the C. Wright Mills Award, has been translated into over a dozen languages, and is considered a classic in the field. Lucas Ronconi is senior researcher at the Centro de Investigación y Acción Social (CIAS) and CONICET in Argentina. His research focuses on informal labor markets in developing countries. He has published extensively on effective regulation, analyzing the relationships between enforcement, the letter of the law and social outcomes. Ronconi holds a Ph.D. in public policy

Contributors

231

from the University of California, Berkeley, and a B.A. in economics from Universidad de San Andrés in Argentina, where he serves as member of the board. Bish Sanyal is Ford International Professor of Urban Development and Planning in the Department of Urban Studies and Planning at the Massachusetts Institute of Technology. He heads the Hubert H. Humphrey Fellowship Program at MIT and is director of the MIT Comprehensive Initiative on Technology Evaluation a USAID-funded project from a grant of $10 million to evaluate technologies for the poor. Sanyal has published extensively on cities and city planning in developing countries, particularly on how to integrate the urban population who are poor into the physical and economic fabric of the city.  His most recent book (coedited) is Planning Ideas That Matter (MIT Press, 2012), which received the 2014 best edited book prize by the International Planning History Society. Ernesto Schargrodsky is president of Universidad Torcuato Di Tella in Buenos Aires, Argentina. Previously, he was the dean of Di Tella Business School. He has been the Edward Laroque Tinker Visiting Professor at Stanford University and the De Fortabat Visiting Scholar at Harvard University. His research includes studies of the impact of police deployment on crime, the effect of the privatization of water companies on child mortality, the analysis of popular support for privatizations, the relationship between bureaucratic wages and corruption, the effect of mandatory military ser vice on crime, the impact on recidivism of the use of electronic monitoring devices instead of incarceration, and the effects of awarding land titles to squatters. His work has been published in the  American Economic Review, Journal of Political Economy, Quarterly Journal of Economics, American Economic Journal: Applied Economics, Journal of Law and Economics, Journal of Public Economics, and Journal of Development Economics, inter alia, and has been discussed at the Economist, Financial Times, and Wall Street Journal. Patricia Cezario Silva is assistant professor at the University São Judas Tadeu, São Paulo, Brazil. Her experience is focused on urban and housing development, slum upgrading, and land tenure regularization. She was a fellow researcher (2014–2015) on a joint program of São Paulo City Hall and the Institute of Applied Economic Research and a H. Humphrey fellow at the Massachusetts Institute of Technology (2012–2013). She holds a bachelor’s,

232

Contributors

master’s, and Ph.D. degree in architecture and urbanism from the University of São Paulo. Susan M. Wachter is the Sussman Professor and Professor of Real Estate and Finance at the Wharton School of the University of Pennsylvania and codirector of the Penn Institute for Urban Research (Penn IUR). Wachter is a former assistant secretary for policy development and research at the U.S. Department of Housing and Urban Development and chairperson of Wharton’s real estate department. She is the cofounder and current codirector of Penn IUR and author of more than two hundred scholarly publications, including fifteen books. She frequently comments on national media and testifies to the U.S. Congress on housing policy.

INDEX

Figures and tables are represented by italicized page numbers followed by the letter f or t Abramo, Pedro, 74 Acemoglu, Daron, 96, 200n6 Acoca-Pidolle, Arthur, 74 Acolin, Arthur, 3, 191 Ahmedabad, India, 187–88, 192 Angel, Shlomo, 27 anthropological perspectives, 57. See also Dharavi slum in Mumbai; formalization of informal real estate transactions in Rio de Janeiro’s favelas; tenure regularization programs in Brazil’s favelas Appadurai, Arjun, 114 Balakrishnan, Sai, 57, 187 Bangalore, India. See periurban land markets in India’s Bangalore region Bangalore-Mysore Infrastructure Corridor (South India), 107, 110 Bangkok, Thailand, 131–32 Becker, Gary, 52, 189–90 Benami Transactions (Prohibition) Act (1988) (India), 200n10 Benjamin, Solomon, 109 Bogotá, Colombia: Biblioteca-Parques (Library-Parks) projects, 167; municipal interventions and institutional reforms in informal settlements, 166–68, 204n11; Peñalosa’s mayoral administration, 167–68; Transmilenio Bus Rapid Transit (BRT) network, 167 Bombay Municipal Corporation, 18 Bombay Urban Development Project (BUDP), 131, 132 Brakarz, José, 123 Brazil, 58–93, 150–53, 164–66; changing attitudes toward informal settlements

and impact of informality, 164–66; City Statute (2001) and right to housing, 60, 84–85, 150–51, 202n1; favela population growth rates, 60, 92; formalization of informal real estate transactions, 58–82, 151–52; land-use regulation bureaucracy variations within cities, 34–36, 37t, 44; Lula da Silva’s administration and Ministry of Cities, 85; social housing movement, 88; “Special Social Interest Zones” (ZEIS), 151; tenure regularization in the favelas, 60–63, 78–80, 83–93, 150–54; three categories of public land under the Civil Code, 86; urbanization trends leading favelas to occupy public land, 86–88. See also formalization of informal real estate transactions in Rio de Janeiro’s favelas; Rio de Janeiro’s favelas; São Paolo’s favelas; tenure regularization programs in Brazil’s favelas Brazilian Law of Adverse Possession, 81 Brihanmumbai (Greater Mumbai) Municipal Corporation (BMC), 98 Brizola, Leonel, 60 Buenos Aires, Argentina, 47–54. See also titling in informal real estate markets Burgess, Rod, 109 Cabral, Serio, 79 Caixa Econômica Federal (Brazilian National Bank), 61 Caminos, Horacio, 204n15 Caracas, Venezuela, 157f, 160f, 203n6 Central Government Railways (Mumbai), 98

234

Index

Cerda, Ildefons, 159 Chattaraj, Shahana, 3, 57, 187, 188, 190, 191 Chávez, Hugo, 163–64 Chen Yuan, 8 China, 4–23, 191–92; cities with population above one million, 8, 10f; comparing aggregated urbanization outcomes to India, 6, 7f, 9t, 13, 15–16, 195nn1–2; decentralized local governance and local expenditures on infrastructure and ser vices, 8–12, 11t, 16–18, 195n3; environmental costs of development, 22; future urbanization challenges, 21–23; GDP growth, 6, 7f, 9t, 13; GDP per capita, 6, 7f, 9t; Hukou system and unregistered migrant workers, 11–12, 22; implications of urban governance for informality, 4–23, 191–92; land reforms and tax assignment system reform, 16–17; local governments’ financial incentives and pro-growth policies, 5, 16–18, 22, 196nn13–14; local revenue, 17–18, 22; open-city model of urbanization, 8, 12; real wage growth and labor productivity, 14, 196n7; in situ urbanization, 15–16; special economic zones (SEZs) and industrial sector growth, 13; subnational expenditures, 16–17; urban informality levels, 5, 12; urbanization and economic growth, 8, 9t; urbanization path, 5–10, 15–16; urbanization rates, 6, 7f, 15–16, 195n1 China Development Bank, 8 Coase, Ronald, 47 Colombia’s informal settlements, 166–71; Bogotá municipal interventions and reforms, 166–68, 204n11; effects of guerrilla insurgency and political instability, 166; effects of narcotics drug trade and violence, 166, 168; Medellín, 156f; Medellín’s municipal interventions and reforms, 166–70, 204nn12–13; tenure regularization programs, 150 Committee for the Formalization of Private Property (Peru), 150 Communist Party of India (Marxist), 107 comparative perspectives, 3. See also land-use regulation bureaucracy in developing countries; titling in informal real estate markets; urban governance systems and development of informality

Concession of Special Use for Housing (CUEM) (Brazil), 81 Congrès International d’Architecture Moderne (CIAM), 159, 203n5 Congress-I (Indian political party), 129–30, 132–37 Dalits of Bidadi, 111–19. See also periurban land markets in India’s Bangalore region De Soto, Hernando, 26, 33, 47, 92, 106, 183–85, 197n1 Deuskar, Chandan, 192 Dharavi Bachao Andolan, 200n9 Dharavi Redevelopment Project (DRP), 95, 98–99, 101–2, 200n3, 200n9 Dharavi slum in Mumbai, 94–106; benami (nameless) property transactions, 99, 200n10; the Dharavi Redevelopment Project (DRP), 95, 98–99, 101–2, 200n3, 200n9; documentary evidence to establish proof of residence for resettlement housing, 100, 102; housing for informal workers and migrants, 99–100, 101; informal manufacturing workshops, 14–15, 94–95; informal real estate markets, 94–106, 200n1; informal rental agreements, prices, and transactions, 102–3; Janata colony, 201n13; Kumhar community, 98, 100–101, 200n1; population, 97, 200n7; Prime Minister’s Grant Project (PMGP), 98, 101, 132–33, 133t, 202n4; privately owned land sites, 98; property values and booming property markets, 95–96, 201n13; rental tenements (chawls), 99, 201n11; slum redevelopment and rehousing strategies, 98, 101, 132–33, 202n4; slumlords and orga nized crime groups, 97; social and political organizations, 98; socioeconomic and ethnic diversity, 98; stateowned land sites, 98; tenure systems, tenure security, and informal markets, 100–105; titling, 103. See also slum redevelopment and rehousing strategies in Mumbai Di Tella, Rafael, 48, 53 Donthi, Praveen, 201n16 Dowall, David, 128 drug gangs and trafficking: Colombia, 166, 168; Rio de Janeiro’s favelas, 62, 65, 78, 165

Index Echeverri, Alejandro, 204n13 Economist, 95, 97 Empresa de Desarrollo Urbano de Medellín, 204n13 Escobar, Pablo, 168 Fajardo, Sergio, 168–69, 204nn12–13 Favela-Bairro communities (Rio de Janeiro), 61–63, 151, 164–65 Federal Reserve Bank of New York, 75 Ferreira, Flavio, 164 Field, Erica, 52, 143 Financial Times, 69, 73 floor-area ratios (FAR), 132, 134–36, 202n1, 202n3 formalization of informal real estate transactions in Rio de Janeiro’s favelas, 58–82, 151–52; buyers’ characteristics and reasons for buying, 66–67; buying a house in a favela, 64–73; the Cartórios de Registro de Títulos e Documentos and verification of signatures, 72–73, 80–81; and concept of land ownership in favelas, 63–64; dispute resolution, 69–71; fluidity of formal and informal transaction boundaries, 80–82, 106, 179; and formal market real estate transactions, 81–82; gentrification and fears of passive evictions, 76–78; how buyers and sellers find each other (word of mouth and for-sale signs), 65; how prices are determined, 67–68; and increased informal real estate prices and rents, 62, 73–76, 74f, 152–53; land titling in the pacified favelas, 60, 63, 68, 78–80, 152; luxury hotels and online booking of rooms, 76–77; percentage of real estate transactions (both rental and purchase), 153f; renters’ vulnerability, 78, 152–54; Residents Association and RA officers as liaisons, 64–66, 68–71, 80–81; signing of the sales document/contract, 68–69, 70, 80–81; tradition of registering formal property transactions in a Cartório de Registro de Imóveis, 71–72; transfer of ownership upon cash payment in full, 69; and urban property taxes (IPTU), 60, 63, 68, 199n10; who’s selling (reasons for selling), 66 Fox News Latino, 73 Frank, Andre Gunder, 183–84

235

Gaitán, Jorge Eliécer, 166 Galiani, Sebastian, 3, 48, 50–53, 143–44, 185, 189 gentrification: and fears of passive evictions in Rio’s pacified favelas, 76–78; and the rent gap, 109; and renters’ vulnerability, 78, 152–53, 154; and tenure regularization in Brazil’s favelas, 76–78, 92 Getulio Vargas Foundation (Rio de Janeiro), 75 Glaeser, Edward, 95 Glaser, Rolf, 75–76 Gouverneur, David, 123, 180, 189 governance. See urban governance systems and development of informality Government of India Planning Commission, 96 Grameen Bank (Bangladesh), 180, 183 Gupta, Prashant, 13 Gyourko, J. E., 26, 31 Haussmann, Georges-Eugène, 158 Hirschman, Albert, 185 Housing Indicators Program, 27 Hukou system (China), 11–12, 22 in situ upgrading, 180–83; and community resource management, 182–83; PAC (Accelerated Growth Program) in Rio de Janeiro’s favelas, 62, 198n6; World Bank policies, 131, 180–81, 182, 183; World Bank’s Slum Upgrading Programs (SUPs), 131. See also slum redevelopment India: Ahmedabad slum redevelopment, 187–88, 192; census towns, 15; cities with population above one million, 8, 10f; comparing aggregate urbanization outcomes to China, 6, 7f, 9t, 13, 15–16, 195nn1–2; constitutional amendments (73rd and 74th), 16, 18, 20–21, 23; Dalits of Bidadi, 111–17, 118–19; decentralization reform efforts, 16, 18–21, 23; future urbanization challenges, 21–23; GDP growth, 6, 7f, 9t, 13; GDP per capita, 6, 7f, 9t; history of land confl icts and periurban restructuring, 107–8; illegal sand mining and environmental consequences, 15, 196n11; implications of urban governance for informality, 4–23, 191–92; informal housing markets, 96; informal urban

236

Index

India (continued) employment, 13–15, 23; informal urbanization, 5–6, 10, 12–16, 22–23; JNNURM and urban governance reform, 20–21, 23; land-use regulation bureaucracy variations within cities, 34–36, 37t, 44; limited local autonomy to finance public ser vices, 10, 11t, 13, 15, 16, 18–21, 195n3, 195n5; local property tax revenue, 19; public-private partnerships and fi nancing of infrastructure projects, 19, 23; real wage growth and labor productivity, 14, 196n7; regularization of informal settlements, 105, 201n17; rural-to-urban migrants, 14, 23; in situ urbanization of rural areas, 5, 15, 23; state regulatory capacity (weak), 15, 196n10; urban local bodies (ULBs) and municipal revenue, 16, 19–20; urban poverty levels, 14, 196nn8–9; urbanization and economic growth, 9t; urbanization rates, 6, 7f, 15–16, 195n1; village panchayats and periurban land markets, 110–13, 119; village panchayats and urban local governments, 16, 18–20. See also Dharavi slum in Mumbai; Mumbai, India; periurban land markets in India’s Bangalore region; slum redevelopment and rehousing strategies in Mumbai Indonesia’s housing markets, 27 informal armatures approach and the “self-constructed city,” 123–24, 155–56, 171–75, 174f; securing of public land by the public sector (as precondition), 174–75; what it allows planners and officials to accomplish, 172–74 informality, 4; the condition of urban informality in Latin America, 141–43, 142f, 153; defi nitions, 4, 105, 156, 203n1; effects of land-use regulation on, 4, 15, 24–26, 44, 142, 196n10, 197n1; emergence on city fringes/peripheries, 156–58, 160–61; examples of rapid, unplanned urban growth, 157f; historic efforts to sanitize and orga nize, 158–61, 203nn3–6; impact of changing attitudes toward (in Latin America countries), 162–71; policy perspectives and Turner’s alternative views, 178–80, 191; policy perspectives and World Bank conventional views,

178–80, 191. See also urban governance systems and development of informality Institute of Land and Cartography of the State of Rio (ITERJ), 79 Inter-American Development Bank, 61 Jáuregui, Jorge Mario, 164 Jawaharlal Nehru National Urban Renewal Mission (JNNURM) (India), 20–21, 23 Johnson, Simon, 96, 200n6 La Porta, R., 39 Land, Peter, 204n15 land regularization. See tenure regularization in Latin America; tenure regularization programs in Brazil’s favelas land titling. See titling in informal real estate markets LandScan Global data, 39 land-use regulation bureaucracy in developing countries, 24–46; bribery in construction permitting, 28t, 29, 32t, 33, 34, 36, 37t, 38–40, 45; correlations between regulations and a country’s level of economic development, 39–41, 39f, 44; correlations (partial) between regulations and city characteristics, 43–44, 43t; correlations between regulations and enforcement, 36–38, 38t; cost property (cost of registering property transfers), 38t, 41t, 42–43, 43t, 197n7; effects on informality, 4, 15, 24–26, 44, 142, 196n10, 197n1; enforcement and compliance issues, 25, 197n2; importance of a country’s legal system, 39, 41–43, 41t, 45, 197n7; indicators of procedures for doing business, 28–31; Indonesia’s housing markets, 27; international databases, 25, 27–33, 197n4, 197n6; land obstacles, 38t; literature review, 26–27; map of world cities that have some measure of land-use regulation, 29, 30f; number of countries and cities with coverage of regulatory data and other selected data, 28t; obtaining construction permits and property registration, 28–29, 28t, 31–36, 32t, 35f, 37t, 38t, 39f, 40f, 41t; slum redevelopment in Mumbai and increased permitted intensity/density, 126, 132, 134, 135–36, 202n1, 202n3; summary of

Index regulation procedures (Latin America, Asia, and other regions), 31–33, 32t; variation across regions, countries, and cities, 31–36, 32t, 35f, 37t, 45; variation within countries (Brazilian and Indian cities), 34–36, 37t, 44; variation within regions, 33–34, 35t; zoning obstacles, 38, 38t, 39, 41t, 42, 43t. See also urban governance systems and development of informality Le Corbusier, 159, 203nn5–6 Learning by Doing: World Bank Lending for Urban Development 1972–1982 (Cohen, Madavo, and Dunkerley), 177 Lewis, Gregg, 52 Lula da Silva, Luiz Inácio, 85 Magalhães, Alex Ferreira, 81 Mahajan, Sharad, 100, 104, 105 Maharashtra Housing Development Authority, 98 Maia, Cesar, 164–65 Malpezzi, Stephen, 196n12 Maricato, Erminia, 84 Mashaal (Indian housing NGO), 100 Mautner, Yvonne, 57, 186, 188, 190 McKinsey Global Institute, 13 Medellín, Colombia: the Biblioteca España, 168; examples of informal settlements, 156f; Fajardo’s mayoral administration, 168–69, 204nn12–13; GIS maps of informal settlements, 204n12; gondola transportation system (Metrocable) over Barrio Santo Domingo, 168, 169, 170; municipal interventions in informal settlements, 166–70, 204nn12–13; narcotics drug violence and the Medellín Cartel, 168; Proyectos Urbanos Integrales (Integrated Urban Plans) (PUIs), 168–69 Mehta, Mukesh, 98–99, 200n9 Miceli, T. J., 41 Mockus, Antanas, 204n11 modernist design principles and the formal city, 159–61, 203nn5–6 Monkkonen, Paavo, 3, 27 Mukhija, Vinit, 123, 127, 181, 186–87 Mumbai, India, 94–106, 125–39; BandraKurla complex and new central business district, 97; Dharavi slum’s informal real estate markets, 94–106, 200n1; electoral politics, 129–30, 132, 133–37; geography

237

and spatial constraints, 128; “informal” housing developments inhabited by the wealthy and middle classes, 105, 201n18; Island City and suburbs, 128, 129t, 135–36, 135t; residential property values, 95–96, 125–26, 128, 129t, 135–36, 201n13; slum redevelopment and rehousing strategies in, 125–39, 186; uneven wealth distribution, 128–29. See also Dharavi slum in Mumbai; slum redevelopment and rehousing strategies in Mumbai Mumbai Transformation Support Unit, 105 The Myth of Marginality (Perlman), 78 National Council for the Environment (Brazil), 199n4 nongovernmental organizations (NGOs), 182, 186, 188 O Globo (Brazilian newspaper), 73, 76 Ostrom, Elinor, 182–83 Paris, France: Haussmann’s midnineteenth-century initiatives to sanitize, 158; Le Corbusier’s proposals for modernization, 203n5 Peattie, Lisa, 109 Peñalosa, Enrique, 167–68 periurban land markets in India’s Bangalore region, 107–19, 187; analyzing as a rental confl ict, 117–19; Bidadi Industrial Area, 110–13, 116; Bidadi village panchayats, 110–13, 119; case study (Bidadi area), 110–17; changing forms of “land rent” (and concept of surplus value of land), 109–10, 117–19; coolie migrants (paapa coolies), 116–17, 118; Dalit landowners (market aspirants), 113–16, 118; Dalit political entrants (well-off Dalit households), 112–13; Dalits and job markets, 112–17; Dalits and restructured land markets, 111–19; Dalits of younger and older generations, 115–16, 118–19; debate over compensation rates for expropriated land, 117–18; defi ning periurban areas (rural and urban characteristics), 107–8, 201n1; disruption of land-based agrarian social relationships, 109–10; distributional implications, 109–10, 119; rents and land scarcity, 108–10, 119; role

238

Index

periurban land markets in India’s Bangalore region (continued) of the state, 108; Vokkaliga landowners (intermediate-caste group of agrarians), 111, 115–16 Perlman, Janice E., 57, 106, 179, 190 Peru’s tenure regularization and titling program, 143, 149–50 Plan for the Rehabilitation of Barrios of the Metropolitan Area of Caracas (Venezuela), 163–64, 170, 203n8 Planning and Design for Future Informal Settlement: Shaping the Self- Constructed City (Gouverneur), 204–5n16 policy perspectives on informal real estate markets, 123–24, 177–93; learning from three policy interventions, 180–88; private property rights and housing supply, 183–86; in situ upgrading and lessons from upgrading approaches, 180–81, 182–83; slum redevelopment approaches, 181, 186–88; three questions requiring future research, 188–93; “urban management” approaches, 181; World Bank policies and recommendations, 180–82; World Bank policy makers and conventional views, 178–80, 191. See also informal armatures approach and the “self-constructed city”; slum redevelopment and rehousing strategies in Mumbai Prime Minister’s Grant Project (PMGP) (India), 98, 101, 132–33, 133t, 202n4 private property rights: de Soto’s arguments, 47, 183–85; and housing supply, 183–86. See also formalization of informal real estate transactions in Rio de Janeiro’s favelas; tenure regularization in Latin America; tenure regularization programs in Brazil’s favelas; titling in informal real estate markets public-private partnerships (PPPs) in India, 19, 23 Quigley, J. M., 27, 31 Raphael, S., 31 real estate transactions. See formalization of informal real estate transactions in Rio de Janeiro’s favelas

rent: changing forms of “land rent” in periurban land markets of India’s Bangalore region, 109–10, 117–19; Dharavi’s informal residential rental agreements, 102–3; Dharavi’s rental tenements (chawls), 99, 201n11; gentrification and renters’ vulnerability, 78, 152–53, 154; gentrification and the rent gap, 109; increased rent prices in Rio’s favelas, 62, 73–76, 74f, 152–53; percentage of real estate transactions in Rio’s favelas, 153f; and tenure regularization in Latin America and renters’ vulnerability, 78, 89, 92, 152–54 Reserve Bank of India’s Department of Economic Policy and Analysis, 19–20 Rio de Janeiro’s favelas, 58–82, 151–53; Cada Familia Um Lote, 60; Favela-Bairro communities, 61–63, 151, 164–65; formalization of informal real estate transactions, 58–82, 151–52; gentrification and fears of passive evictions, 76–78; history of drug gangs and drug trafficking, 62, 65, 78, 165; longtime communities which became “consolidated,” 61, 198n5; Minha Casa, Minha Verde housing project, 62; Morar Carioca, 61, 151; My House, My Life project, 198n6; PAC (Accelerated Growth Program), 62, 198n6; Rocinha, 65–66, 73, 76, 79; tenure regularization programs, 60–63, 78–80, 151–53, 164–65; titling programs in the pacified favelas, 60, 63, 68, 78–80, 152; UPP favelas and pacification, 62, 67–68, 73–78, 165, 198n7, 204n9; Vidigal, 65–66, 70, 73, 75–79; Vila Autódromo, 62–63; World Cup and Olympic Games sites, 62–63, 73, 75, 76, 165. See also formalization of informal real estate transactions in Rio de Janeiro’s favelas Rio Times, 79 Ronconi, Lucas, 3 Rosenthal, L. A., 31 Saiz, A., 31, 39 Sanyal, Bish, 192 São Paolo’s favelas: impacts of tenure regularization on public land for “common use” in Osasco, 88–93; and metro population growth, 60, 86; tenure regularization programs in, 60, 83–93.

Index See also tenure regularization programs in Brazil’s favelas Schargrodsky, Ernesto, 3, 48, 50–53, 143–44, 185, 189 Schon, Donald, 182 Scruggs, Greg, 74 Sen, Amartya, 5 Sert, Josep Luis, 204n15 Shiv Sena (Indian far-right party), 129, 132–34 Silva, Patricia Cezario, 57, 186, 188, 190 Singh, Manmohan, 191 site and ser vice programs, 109, 172, 181, 204n15 slum redevelopment, 181, 186–88; Ahmedabad, India, 187–88, 192; conventional slum clearance and improvement efforts, 97, 125, 129–32; and economic growth rates, 186–87; and NGOs, 186, 188; and private developers, 134–36, 188. See also slum redevelopment and rehousing strategies in Mumbai slum redevelopment and rehousing strategies in Mumbai, 125–39, 186; Bombay Urban Development Project (BUDP), 131, 132; community opposition to, 99, 200n9; and conventional slum clearance and improvement efforts, 97, 125, 129–32; cross-subsidy strategies, 126, 133t, 134, 135, 137; data, 127; Dharavi Redevelopment Project (DRP), 95, 98–99, 101–2, 200n3, 200n9; Dharavi slum, 98, 101, 132–33, 202n4; future prospects for progress, 137–39; implementation progress and achievements (and critics), 136–37, 136t; increased floor-area ratios (FAR), 132, 134–36, 202n1, 202n3; inherent challenges and limitations, 137; land development regulation changes (allowing increase in permitted intensity and density), 126, 132, 134–36, 202n1, 202n3; Maharashtra Slum Areas Act (1971), 202n2; Maharashtra’s Slum Improvement Board and Slum Improvement Program (1971), 130–31; and Mumbai electoral politics (Congress-I and Shiv Sena), 129–30, 132–37; and Mumbai’s geography and spatial constraints, 128; and Mumbai’s property values, 95–96, 125–26, 128, 129t, 135–36, 201n13; new

239

market-rate housing, 126, 134–36, 135t; policy recommendations, 138–39; Prime Minister’s Grant Project (PMGP), 98, 101, 132–33, 133t, 202n4; and private developers, 134–36, 188; ratio between area of replacement housing and market-rate housing, 135–36, 135t; Slum Areas (Clearance and Improvement) Act (1956), 97; Slum Redevelopment Scheme (SRD), 133–34, 133t; the Slum Rehabilitation Scheme (SRS), 98, 126–27, 133t, 134–39, 135t, 136t, 200n8; transfer of development rights (TDR) options, 126, 136; World Bank’s Slum Upgrading Programs (SUPs), 131. See also Dharavi slum in Mumbai Slum Redevelopment Scheme (SRD) (Mumbai), 133–34, 133t Slum Rehabilitation Scheme (SRS) (Mumbai), 98, 126–27, 133t, 134–39, 135t, 136t, 200n8 Smith, Adam, 6 Smith, Neil, 109 Sone, Mayumi, 79 Spain, 157f, 159 Squatters as Developers? Slum Redevelopment in Mumbai (Mukhija), 127 Su, Ming, 22 Summers, A. A., 31 Tata Motors (India), 107 tenure regularization in Latin America, 140–54; circumstances to be considered, 146–49; Colombia, 150; complexities of implementing, 140–41; and conditions of urban informality in Latin America, 141–43, 142f, 153; examples, 149–53; how to regularize, 144–49; incentives to families, 148–49; and local municipal involvement, 145; necessary preconditions for, 144–46; Peru, 143, 149–50; properties on public land/private land, 85–86, 88–93, 147–48; rationales for, 143–44; and renters’ vulnerability, 78, 89, 92, 152–54; special circuit courts and agreements with property registrars, 146; and special legislation, 144–45; and specialized technical staff, 146; urban regularization vs property regularization, 147. See also formalization of informal

240

Index

tenure regularization in Latin America (continued) real estate transactions in Rio de Janeiro’s favelas; tenure regularization programs in Brazil’s favelas; titling in informal real estate markets tenure regularization programs in Brazil’s favelas, 60–63, 78–80, 83–93, 150–54; Brazil’s legal frameworks and state policies, 84–86, 92, 150–51; City Statute (2001), 60, 84–85, 150–51, 202n1; densification and building lot sizes/unit sizes, 89–90, 90t, 199n3; densification and populations, 90, 90t; effects on household incomes, 89, 199n2; effects on physical arrangements in the favelas, 89–92; environmental threats to water streams and preservation, 91–92, 91f, 93, 199n4; and favela residents’ strong sense of community, 92–93; impacts on public land for “common use” in Osasco (São Paolo), 88–93; and irregular subdivisions at city peripheries, 151–52; local governments’ roles in issuing legal documents/grants, 86; metro São Paolo favelas, 60, 83–93; private land programs, 85; Provisional Measure (PM) 2220 and public land, 84, 85; public land programs, 85–86, 88–93; and renters’ vulnerability, 78, 89, 92, 152–54; in Rio’s favelas, 60–63, 78–80, 151–53, 164–65; “Special Social Interest Zones” (ZEIS), 151. See also formalization of informal real estate transactions in Rio de Janeiro’s favelas Tiebout, Charles M., 8 titling in informal real estate markets: comparing effects titled/untitled households of Buenos Aires, 47–54, 143, 144, 185; effect on access to credit, 50, 54, 144, 185; effect on earnings (labor income), 50, 54; effects on belief formation (pro-market beliefs), 53, 54; effects on child health, 53; effects on fertility and children’s educational outcomes, 52, 54; effects on housing investment and improvement in house quality, 50–51, 143, 185; effects on size and structure of households, 51–52, 54; effects on teenage pregnancy, 53; and expropriation compensation offers to original owners, 49–50; and the new

institutional approach to development economies, 47; Peru’s nationwide program, 143, 149–50; and poverty alleviation efforts, 47–48; rationales for, 143–44; in Rio de Janeiro’s pacified favelas, 60, 63, 68, 78–80, 152; as savings tool, 51; and World Bank’s Slum Upgrading Programs (SUPs) in Mumbai, 131 Transforming Indian Cities: Challenges and Opportunities (Singh), 191 Turner, John, 178–81, 183, 191, 204n15 urban governance systems and development of informality, 4–23, 191–92; China’s decentralized local governance and local public expenditures, 8–12, 11t, 16–18, 195n3; China’s fi nancial incentives and pro-growth policies, 16–18; cities with population above one million, 8, 10f; comparing mechanisms of fi nance and government structures, 16–21; differential aggregate outcomes (China/India), 6, 7f, 9t, 13, 15–16, 195nn1–2; future challenges, 21–23; GDP growth (China/India), 6, 7f, 9t, 13; GDP per capita (China/India), 6, 7f, 9t; India’s decentralization reform efforts, 16, 18–21, 23; India’s informal urbanization, 5–6, 10, 12–16, 22–23; India’s limited local autonomy to fi nance public ser vices, 10, 11t, 13, 15, 16, 18–21, 195n3, 195n5; legal systems and land-use regulation bureaucracy, 39, 41–43, 41t, 45, 197n7; negative environmental impacts, 15, 22, 196n11; public-private partnerships (PPPs), 19, 23; real wage growth and labor productivity, 14, 196n7; relationship between infrastructure investments and economic development, 6–8; and rural-to-urban migrant workers, 11–12, 14, 22, 23; in situ urbanization of rural areas, 5, 15–16, 23; and state regulatory capacity, 15, 196n10; urbanization and economic growth (China/India), 8, 9t; urbanization rates (China/India), 6, 7f, 15–16, 195n1. See also land-use regulation bureaucracy in developing countries “urban management” approaches, 181 Urbanized (fi lm), 167

Index Vacant Lands Act (1930) (India), 98 Venezuela’s informal settlements, 163–64, 170; Caracas, 157f, 160f, 203n6; Ministerio del Desarrollo Urbano, 170; Plan for the Rehabilitation of Barrios of the Metropolitan Area of Caracas, 163–64, 170, 203n8; reasons for limited impact of interventions, 164, 170; social housing project (23 de Enero), 203n6; superblock public housing in Caracas, 160f; Urban Planning Law (Ley Orgánica de Ordenación Urbanística), 162 Wachter, Susan M., 3, 191 Wharton Residential Land Use Regulation Index (WRLURI), 26–27 World Bank: Bombay Urban Development Project (BUDP), 131, 132; conventional view of informal settlements, 178–80, 191; Development Indicators, 28, 39;

241 land-use regulation data (Doing Business Project surveys), 25, 27–33, 36, 38–39; land-use regulation data (Enterprise Analysis Unit surveys), 25, 27–33, 197n6; and Peru’s property regularization program, 150; policies and recommendations for informal real estate markets, 180–82; report on informal markets (1983), 177; in situ upgrading strategies, 131, 180–83; Slum Upgrading Programs (SUPs), 131; study of Rio’s PAC and UPP (Pacifying Police Units), 59, 198n3

Yamuna Expressway (India), 107 Yuva (Indian housing rights NGO), 103, 201n13 Zaidi, S. Hussain, 97 Zhao, Quanhou, 22