Several books, monographs, studies, manuals etc. on land development
and management have been published over the years (see Further reading
list), citing both policy successes and failures. However, most
of these have not had a significant impact on government land development
and management policies, perhaps because they concentrated on the
technical aspects of land development and management rather than
its political aspects. Moreover, in most cases their target audience
were technical staff and experts involved in urban planning, development,
management and policy formulation. However, decisions on to how
vigorously to implement a policy or whether to implement it at all,
are taken not by experts but by generalists, who are either elected
or appointed, often on political rather than technical grounds.
This publication is aimed as a primer, for the uninitiated generalists.
It focuses on concepts and issues in urban land and on possible
policy tools to address these issues. A special emphasis is placed
on increasing the access of the urban poor to the formal land and
By the year 2025, most Asians will be urban dwellers.
How well cities function as a system will determine the future of
In the past 30 years the urban population in the Asian and Pacific
region has increased by 560 million people (or 260 per cent) and
in the next 30 years it is expected to increase by about 1,450 million
people (or 250 per cent). This unprecedented urbanization process
has been fueled by rapid economic growth and even more rapid industrialization.
With the globalization of economies this trend towards rapid economic
growth and urbanization is likely to continue and even increase.
Several mega-cities and large cities, with populations over a million
have emerged and will continue to emerge. If present global trends
continue, the twenty first century will be an Asian century, with
Asia poised to become the world's dominant economic powerhouse.
By the year 2025, most Asians will be urban dwellers. Cities in
Asia and the Pacific are centres of both hope and despair: while
being engines of economic and social development they are also congested
centres of poverty and environmental deterioration.
With most of its value added economic activities and populations
located in urban areas, how well cities function as a system will
determine the future of Asia.
Land markets in the urban economy
If land and property markets are not regulated, they
can contribute to the collapse of capital markets, and cause unemployment.
The urban economy comprises three basic markets: the urban land
market, the urban capital market, and the urban labour market. These
markets are inexorably linked and dependent on each other. Of these
markets the land market most directly affects the urban environment
and the quality of life in cities. Efficient and equitable land
markets are a prerequisite for well functioning cities. However,
most cities in developing countries of the region suffer from land
market distortions caused by poor land development and management
policies including poor planning, slow provision of infrastructure
and services, poor land information systems, cumbersome and slow
land transaction procedures, as well as under regulation of private
land development, leading to unplanned or ribbon/corridor development
of land in the urban periphery.
Distortions in the land market often lead to land speculation.
In fact, as it became evident recently in the South-East and East
Asian economies, if land and property markets are not properly regulated,
they can contribute considerably to the collapse of capital markets,
and cause unemployment in the labour markets.
Political aspects of land development and management
The key to efficient land markets is the easy and rapid availability
of developed land. This does not mean less regulation. In fact in
the urban periphery there is need for more planning controls. What
this means is proper regulation which facilitates the development
of land but at the same time provides rules which protect the environment
and improve the quality of life of urban residents. The main constraints
to efficient land markets are often more political than technical.
Constraints to efficient land markets are often more
political than technical.
Land in and around urban areas are either owned by the government,
or by the private sector or, as in most Pacific island economies,
it is owned communally by tribes or clans. Often large land owners,
be they governmental, communal or private, have a vested interest
in maintaining the status quo. These vested interests gain more
by keeping the land markets fragmented, without proper controls
and by keeping the dealings in the land market non-transparent.
While they profit from the status quo the prime losers are the urban
residents, particularly urban poor.
Land development and poverty alleviation
The urban poor suffer most from a dysfunctional city. Distortions
in the land markets allow land speculation which often prices the
poor out of the formal land markets, into the informal land markets
which are exemplified by slums, squatter settlements and illegal
sub-divisions, mainly in the periphery of cities. This leads to
longer commuting time and costs, very poor living conditions, caused
by a lack adequate infrastructure and services, causing poor health
and greater expenditure, thereby entrenching the cycle of poverty.
I. Land Markets
In traditional capitalist literature land is regarded as one of
the three basic factors of production in an economy together with
labour and capital. Land is a special component because unlike labour
and capital it is finite. Land or at least land-use rights have
been used as a commodity to be bought and sold in capitalist systems
for at least the past two centuries.
Most countries of the region put restrictions on the
use of both free-hold and lease-hold.
Once individuals or corporate entities acquire either land or land-use
rights they acquire tenure. This tenure can either be sold or leased
by the owner. Therefore tenure is divided into two categories: lease-hold
and free-hold. Leases can vary from 30 years as in Thailand to 99
years or in perpetuity as in South Asia. The longer the term of
lease the more it resembles freehold. Most leases place restrictions
on the lease holder. For example a lease holder may be allowed to
construct a building over the land but may have no rights to the
minerals in the land. Free-hold has very few restrictions on it
and is considered by economists to be more secure. Lease-hold is
considered more equitable as it reserves the right of ownership
of land to the society as a whole rather than to an individual.
However, most countries of the region put restrictions on the use
of both free-hold and lease-hold in the better interest of society.
Most countries of Asia and the Pacific have a mixture of free-hold
and lease hold tenure.
Characteristics of efficient land markets
Once land is traded as a commodity a land market is considered
to exist. A well-functioning land market could be defined as one
The system governing the land market encourages quick development
and transaction of land.
The system governing the land market provides reasonable access
to all income groups.
The system governing the land market protects its sustainable use
for the good of both current and future users
The system governing the land markets is integrated with other
laws and regulations governing land, such as, planning, taxation
and provision of public infrastructure and services.
A poorly functioning land market leads to several ills including,
land speculation, creation of slums and squatter settlements, environmental
deterioration, and an inefficient urban development pattern which
increases the cost of doing business in the city and adversely affects
the urban economy.
Land speculation can drive land prices beyond the
productive value of the land, causing a "bubble" land and property
market. When the "bubble" breaks, financial institutes which lent
money to land and property speculators find themselves unable to
recover their loans, causing a crises in the financial markets.
Land speculation occurs when the demand for land, at the present
time or in the near future, outstrips the supply of land. This can
be caused by several factors both on the demand side and on the
On the demand side land speculation can be triggered by excess
liquidity in the financial markets caused either by rapid economic
growth or by a lack of opportunities for investors in other sectors
of the economy, in slow growing economies. In either scenario investors
invest, on a short term to medium term basis, in the land market,
waiting for prices to increase and sell their tenure at a profit.
Rampant land speculation can drive land prices beyond the productive
value of the land, causing a "bubble" land and property market,
where prices of land and property are overpriced. This can spiral
into loans taken on value of land and property at inflated prices
from the financial markets. When the "bubble" breaks either by internal
or external factors, financial institutes which lent money to land
and property speculators find themselves unable to recover their
loans, ending up with bad debts, triggering a collapse of the financial
markets. Land and property speculators have been blamed for triggering
the financial market crises in South-East Asia.
In stagnant or slow growing economies with fewer options for investment,
investors speculate in land creating a "bubble land market". When
investment opportunities increase, investors diversify their assets
and land prices plummet. The impact on financial markets of land
market collapse although not as severe as in bubble markets of rapidly
growing economies can still be devastating.
On the supply side land speculation is caused by bottlenecks in
the availability of serviced land (land with access to basic infrastructure
such as roads, water, electricity etc.). These bottlenecks can be
caused by several factors either in the land development phase or
in the transaction phase.
Slow provision of infrastructure and services can cause the bottlenecks
in supply of serviced land. This is often the case where government
agencies are in charge of providing infrastructure as is the case
in many South Asian countries and countries with transition economies.
Some studies have shown that the average time lag between the announcement
of a land development scheme and actual delivery of severed plots
can take as long as five years.
Bottlenecks in the supply of serviced land are caused
by slow provision of infrastructure and services, poor city planning,
poor land records, and cumbersome procedures to buy and sell land.
Another cause of slow land development is poor city planning. The
Government often provides arterial infrastructure, leaving the provision
of secondary and tertiary infrastructure to individuals or private
sector developers. Because of the inability of the private sector
or individuals to assemble raw land, only land closest to the arterial
infrastructure is developed, causing ribbon or corridor development.
Such development is often found on the periphery of Asian cities.
Land farther away from the arterial infrastructure is often left
unserviced and thereby unusable for urban purposes. Thus one gets
city development patterns with large pockets of vacant, undeveloped
land in the city. This type of development causes increased costs
of doing business in the city as it increases the costs of transport
and provision of infrastructure.
Bottlenecks can also occur in the transaction phase of land development.
Due to poor cadastral land records, slow bureaucratic procedures,
it can take a long time to buy and sell land in the market and to
register such transactions with government institutions.
In addition to high economic costs land speculation
has high environmental and social costs.
The environmental costs of land speculation can be high. Rather
than develop existing vacant land within a city land developers
find it more profitable to develop new land along transport arteries
in the periphery, often by converting agricultural land or land
earmarked as green areas. This type of ribbon development puts greater
pressure on natural resources, particularly water as it increases
the amount of leakage. It also increases the costs of disposing
urban waste water and solid wastes. Because of greater commuting
distances and lack of an adequate transport infrastructure it also
increases air pollution.
Social costs of land speculation can also be very high. As stated
earlier it can drive the urban poor out of the formal urban land
market, pushing them into squatter settlements, illegal subdivisions
and slums. Poor housing and infrastructure conditions not only increase
the cost of living but also cause poor health and entrench the cycle
In some countries, speculation in the land markets has made housing
unaffordable even for the middle classes. Surveys have shown that
some lower middle class families are forced to find shelter in illegal
II. Government interventions in the urban land markets
The rapid urban development process taking place in developing
countries leads to swift and drastic changes in the physical, economic,
social political and administrative structures of the countries
and the cities. Historically governments have felt a need to guide
and control the important structural changes which occur within
their domain. This holds true especially for a scarce resource such
as land. Three main justifications for government interventions
in the urban land market are often cited:
- 1. Eliminating market imperfections and failures to increase
2. Removing externalities so that the social costs for land market
outcomes correspond more closely to private costs.
3. Redistributing society's scarce resources so that disadvantaged
groups can share in society's output.
Governments have a wide variety of tools available to implement
their objectives of regulating land market within its boundaries.
These include planning tools, zoning ordinances, building regulations
and by-laws, permits, inspections and penalties. However, their
implementation has had limited results.
The European planning models used in most developing
countries of Asia, are usually old and out-dated and have been abandoned
even in the country of origin.
A general problem is that these tools were either inherited from
colonial powers or developed either in Europe or in North America.
There are many characteristics which make these planning tools unsuitable
for Asian cities. Although there is a great variation of situations
in the Asian region, there are some common characteristics which
include physical expansion and population growth rates, high levels
of centralization and hierarchical administrative and political
structures, as well as, features which reduce the productivity of
land, such as land speculation. Furthermore, the European planning
models, which are in use in most developing countries of Asia, are
usually old and out-dated and have been abandoned even in the country
Efficient functioning of land markets require efficient
and updated land registration systems which clearly indicate legal
ownership of land
As populations gradually grew in most societies, land became an
increasingly scarce resource and various types of rights to use
the land developed. Traditionally, land transfers became a legally
binding agreement upon the delivery of the transfer price or an
oral agreement. However, it became increasingly necessary to develop
systems which would clarify ownership and minimize disputes. The
three major land registration systems which developed are the deeds
registration system, the title registration system and the private
In the deeds registration system, the transfer document (the deed)
itself is registered. The deed does not prove the ownership and
the chain of ownership has to be traced back either by lawyers or
the land registration authority.
In the title registration system the certificate itself is the
proof of ownership. This system was developed in the United Kingdom
and exists in countries which had been under British influence.
In some countries this system has led to an incomplete land registration
system either because it is not compulsory to register transfers
or because it is only necessary to register when land is sold or
subject to long lease. The Torrents system is a variant of the title
registration system developed in Australia. The advantage is that
there are two certificates to each parcel and the original is kept
at the land registry. An ownership transfer is merely endorsed on
the back of both the original and duplicate. Variations of this
system have been adopted in countries such as Thailand, Malaysia
The private conveyance system is the most common system in developing
countries. It is based on the system to register deeds. However,
only about 10 to 20 per cent of transactions are registered for
example in Bangladesh and Pakistan with the remaining transactions
conveyed either formally or informally with or without a person
of legal training involved. A practice has gradually developed in
most societies whereby the land transaction should be written and
that there should be a witness.
The process of registering deeds is often very time-consuming in
developing countries. Efficient functioning of land markets require
efficient and updated land registration systems which clearly record
legal ownership of land. The market attaches great importance to
legal titles to land. This is evident from the fact that land without
legal or disputed titles is seldom bought. In situations where untitled
land is bought, such as in illegal settlements, prices are much
lower than that of land with titles.
Land registration is also important for governments for collecting
property taxes. Without knowing who owns the land and what that
land is being used for, governments cannot levy property taxes.
An efficient land registration system (juridical cadastre) consists
of two parts: The first part is a written record or register with
information on each parcel, such as owner and the rights of the
land, while the second part includes a detailed description of the
parcel in the form of a map or survey measurements. The second part
is normally cross-referenced with the first. When the records and
descriptions are combined, then the land registration system provides
considerable benefits. Some of the major benefits are listed below.
- Security of ownership and tenure rights
This is the most important impact. It reduces the amount of land
disputes which currently is a major issue in developing countries.
The security of ownership also stimulates land development.
- More efficient land transfers
The costs of delays for permits is a serious constraint in most
developing countries, and an efficient registration system makes
transfers easier, less expensive and more secure.
The land title can be used as collateral for loans. This security
has a positive impact on the productivity of the land since it enables
the release of major financial resources for investment in the land.
- Public control of land markets and intervention
Policies such as land redistribution and control over foreign land
ownership are difficult to implement without a functioning land
- Support for the land taxation system
The expenses for improving the cadastral system would, in actual
fact, quickly be covered by increased property tax revenues.
- Improved land use and management
It can directly provide better information on land ownership and
rights for physical planning as well as facilitate the development
of other planning tools such as information banks covering land
use, land values, population etc. It can also provide a tool to
restrict certain land uses with a negative environmental impact.
Governments have been unable to improve the efficiency
of land registration systems because of institutional, technical
and economical constraints and a lack of political will.
The problems which governments are facing in developing countries
can be divided into four categories: institutional, technical, economical
and lack of political will. The institutional problems include shortage
of skilled and lack of interorganizational and interdepartmental
coordination. Technical problems include the inefficiency and inflexibility
of the existing system and the high standards regulated for surveys.
Financial problems are incurred through high costs for subsidizing
the system. It has been proven in many countries that the costs
for improving the registration system can be recovered within a
very short time span with revenues from land transfers and/or property
taxes. The motivation problem often stems from the fact that registration
of such a scarce and valuable commodity such as land is politically
It has been recommended that developing countries should use progressive
systems. This means that when a new cadastral/land registration
system is introduced, or an old improved, its design should be such
that, although technically simple, it can be upgraded easily and
is readily adaptable.
However, before setting up a progressive system it is necessary
to assess the existing system and define the objectives for improvement.
It is very often necessary to improve the institutional arrangements
and strengthen the technical skills of staff. It may also be worthwhile
to consider introducing some incentives for individuals to register
their land. The incentives may include, for example, inexpensive
registration fees, introduction of grace periods from property taxation
and legal assistance to low-income groups. It could also be desirable
if the national control boards for banks provided stricter rules
so that a mortgage could only be provided for land which is officially
Historically, governments have established records (cadastres)
for fiscal and legal purposes, based on either ownership, parcel
(plot) or a series of plots with the same owner (land-holding).
These records have been established and kept separately. In an increasingly
complex society with an abundance of data and information, there
are many reasons for developing a system to attain and combine information
on land in a systematic, rational and efficient manner. There are
now considerable efforts being made in many countries around the
world to create land information systems with data from different
sources based on a cadastre where each parcel has a unique identifier.
With the advances in information technology it is becoming increasingly
cheaper to develop and maintain land information systems.
Land information management is an integral part of urban development
and urban management. The actions which are required in order to
improve the land information system may vary depending on the city
and country context but there will always be a basic need for cooperation
between different government agencies.
The need for efficient land management systems in developing countries
are evident. Initial efforts to develop a land information system
can be vary time consuming as some information and data may be non
existent or different sources may provide conflicting information
or data. Land information systems should be developed incrementally
to iron out these problems, as well as, to train staff to utilize
it to its maximum capacity.
Physical planning in developing countries is most often regarded
as essentially static in nature, lacking effective land-use control
mechanisms and investment priorities. Planning is restricted by
the lack of feasible means to ensure implementation, anticipate
market reactions, as well as, means to consider the cost implications
for various government agencies and the economic impact on various
The most commonly used planning tools include comprehensive general
plans, master plans, strategic plans and structure plans. The broad
objective of these plans is to guide the development of the city
for a specified time period and to promote the land-use pattern
which most efficiently fulfills the objectives of the government.
Experience has shown that general and master plans tend to be static
or assume slow-growing cities. These two plans also tend to be too
time-consuming, detailed and costly to develop and are mostly failing
to consider the full consequences of economic demand for space.
They also tend to ignore how households and the commercial sector
alter their demand for land as prices change.
A more appropriate and dynamic planning tool for developing countries
is structure planning. This approach highlights the critical issues
and prioritizes infrastructure in investments which are the key
issues for shaping city growth. It provides a broad framework for
local decision-making and it involves public participation. The
structure plan includes some practical actions which are necessary
to influence development towards the defined objectives.
Land use zoning is effective to control densities
and protect the natural and living environments.
The plans discussed above use different forms of zoning and regulations.
Zoning dictates to the land owner the purposes he or she can use
the land for and what can be built on that land. Zoning regulations
are usually passed by local authorities, although in some countries
provincial or even central governments retain the power to approve
zoning regulations. Zoning regulates the use of land in areas for
residential, commercial, industrial, agricultural or other land
use. Earlier on, zoning ordinances used a scale of intensity which
ranged from single-family residential (least intense) to heavy industrial
(most intense). This system of detailed designation has proved impractical
and modern zoning systems are more flexible.
Some zoning ordinances apply "bulk" control over land and buildings.
They aim at controlling the density of population, production and
traffic; as well as providing adequate daylight, air, open space
and privacy. Older zoning restrictions included requirements of
open space around buildings, placement of building by height limitations,
setback regulations (from roads), and limitations on shaped and
volume. Floor area ratios (FAR) is a more modern control mechanism
based on a ratio between the floor space of the building and the
Zoning can be a very powerful planning tool as it permits the government
to select which land uses should be allowed. However, zoning is
very difficult to implement effectively as, contrary to regulated
zoning ordinances, land in Asian cities is frequently used for other
or mixed purposes such as residential and commercial use. Mixed-use
zoning has been introduced in some large-scale projects for a more
comprehensive and flexible approach to zoning, partly to provide
a legal process to accommodate the need for using land for mixed
purposes. This technique permits significant physical and functional
integration of project components. As it is, zoning will work most
efficiently as a planning tool when it is complemented with other
control mechanisms at the more detailed level such as land subdivision
and building regulations.
- Land subdivision regulations
Land subdivision and building regulations are used
to plan at the micro level and to secure socially acceptable minimum
Subdivision regulations govern the development of raw land for
its zoned purpose in much more detail. The regulations define standards
for layout and lot sizes, street improvement and procedures for
assigning private land for public purposes. Subdivisions provide
the essential characteristics of land uses, street patterns and
public utilities. The amount of land which is thereby dedicated
for public purposes differs between countries and may represent
a substantial portion of the total land area.
While subdivision plans and regulations have proved to be a very
efficient tool in European countries as a means to force developers
to cover some or all the costs for provision of public infrastructure,
they have been less successful in developing countries. Problems
encountered include the implementation of the subdivision controls
and the vast areas, mostly in the urban fringe, where land is illegally
subdivided in order to provide more shelter. These irregular subdivisions
with high densities frequently cause health, fire and other hazards.
Another major problem with these regulations is the juridical division
between urban and rural areas or between the various types of local
authorities. Often land subdivision regulations do not apply to
areas designated as rural or which fall in the administrative boundaries
of rural local authorities, while most conversion of urban land
takes place in these areas. The needs and conditions of development
in developing countries require a more flexible set of standards
than what has been introduced based on European experience. These
standards should consider the rapid changes in the urban fabric,
relate more to local conditions and be easier to implement. It would
be beneficial to introduce, for example, a permissive system of
development control whereby certain development within some clearly
specified categories does not necessarily require planning and/or
building permission. A permissive system would assume that the builder
follow development standards but it has to be combined with a system
of spot checks and strict use of penalties. A permissive system
would free scarce government staff to focus on priority tasks such
as controlling negative impacts from industrial development and
other health hazards, and implementing innovative planning and development
control measures to improve the traffic situation. It would also
be possible to introduce incremental development standards which
would vary depending on household affordability.
Building regulations are another means of regulating land use.
Their main objective is to secure socially accepted minimum standards.
Although originally mainly concerned with fire protection, structural
safety and sanitation; modern codes are very comprehensive. One
of the problems in developing countries have been that adopted building
codes often have been based on those from developed/industrialized
countries with a different physical, climatological and social environment.
The codes have often been inappropriate and increased development
costs substantially, making it difficult in particular for low-income
groups to afford housing built to legal building standards. Lately,
there has been a tendency in many countries to ease building standards
by reducing lot sizes and eliminating amenities.
In a market economy a government's role should not
be to provide goods and services. It should be to enable their provision
by other actors and to regulate the market to ensure that it is
competitive, sustainable and equitable.
As stated earlier one of the most powerful tools that a government
has to intervene in land markets is land development. A government
has two options for its intervention: it can either develop land
itself or it can promote land development through the private sector.
Experience has shown that direct government development of land
has not been very effective. Long delays due to bureaucratic procedures,
poor quality of construction, lack of coordination between different
agencies have been some of the reasons for the inefficiency of governments
in land development. As discussed earlier delays in providing serviced
land increase rather than decrease market distortions.
In a market economy, the government's role should not be to provide
goods and services but rather to enable or facilitate other actors,
be they commercial or community-based, to be the providers. Government
should reserve its interventions to regulating the market to ensure
that it is competitive, sustainable and equitable.
- Land pooling/readjustment
Another technique for promoting efficient, sustainable and equitable
land development in the urban fringes is land pooling/readjustment.
The concept of land readjustment has been used in various countries
of the world for at least two hundred years. It has been most successfully
used in Japan and Republic of Korea in recent years.
The concept of land readjustment is to assemble small rural land
parcels into a large land parcel, provide it with infrastructure
in a planned manner and return the reconstituted land to the owners,
after deducting the cost of the provision of infrastructure and
public spaces by the sale of some of serviced land.
A land readjustment scheme is typically initiated by the municipal
or the national Government designating an area which is about to
be converted from agricultural to urban land use. A subdivision
plan is developed for a unified planning of the area. Provision
of infrastructure and services is financed by the sale of some of
the plots within the area, often for commercial activities. The
original landowners are provided plots within the reshaped area
which, although smaller in size, now have access to infrastructure
There are several inherent and complex equity problem in the allocation
of plots and the provision of financial compensation. Before the
project, the plots may have a different physical shape and economic
value. Some plots may be hilly and unsuitable for urban use, while
others may be very suitable for agricultural production but expensive
for constructing housing. Even during the period of construction
the impact will differ as these typically large projects will begin
in one end of the project area and it may take years before the
other end is completed and all services provided. Some landowners
such as farmers may loose their income opportunities earlier if
they are located where the project starts. After the project, there
may be differences owing to the allowed land use and the allocation
of plots. Residential or commercial plots with high-density land
use as well as plots located close to infrastructure hubs, commercial
activities and along main roads, will have high land values. The
solution for this equity problem may differ among countries using
the land readjustment method although research shows that there
are many similarities. For instance, the distribution of revenues
and costs is often based on the present value, often taking into
consideration the suitability of land for urban use.
Land readjustment works best when implemented in
small to medium-size areas
There are many advantages of using land readjustment. First, it
provides an opportunity for a planned development of the land and
infrastructure network and it avoids the problem of the so-called
"leap-frog" development where different types of land uses and densities
are mixed. Developers in many Asian countries often have a problem
because plots in the urban fringe are small, irregularly shaped
and lack access to public roads. Furthermore, as many of these plots
are not for sale, it is often difficult to find a sufficient number
of plots next to each other and, thus, building development becomes
Second, land readjustment is an attractive method to influence
the location and timing of new urban development since it is becoming
increasingly difficult to obtain public support for the use of expropriation
for land development and infrastructure provision. The method is
typically supported and sometimes even initiated by the landowners
since they would make considerable profit on the project. Contrary
to the obvious alternative methods for city development, land banking
and expropriation, it also avoids the costly and unpopular government
procedure of acquiring land. Unlike expropriation, land readjustment
will return a major part of the land to the landowner. Ideally,
a partnership for development should be formed between the public
sector and the landowners. It is therefore very important that close
links are established during the project.
Third, it provides an opportunity for the provider of infrastructure
and services to recover the incurred costs as well as to get access
to land for this purpose. As cost recovery is a major obstacle for
municipal governments in most Asian countries, this would probably
be the most important component.
Fourth, a welcome side effect is that land readjustment requires
that the land ownership situation is clarified and an accurate land
registration system provided. This should also lead to increased
public revenues from property taxation.
Fifth, if administered properly it could provide increased equity
in land distribution. Not only among the landowners within the area,
but it could also be a means of providing access to land for low-income
The current system of land readjustment does not
prevent landowners from speculating, it does not have a mechanism
for levying betterment taxes and it requires a large number of skilled
negotiators and valuers.
The above notwithstanding, there are a number of problems with
the land readjustment technique. First, while they provide an opportunity
for landowners to develop their land, the present systems do not
force the development of land. In many countries with very high
demand for land, such as Japan and the Republic of Korea, it has
become increasingly common that landowners use their land as a savings
and investment instrument and this has contributed to increases
in land values and land speculation. Furthermore, another major
incentive for landowners to encourage high land values is that the
provision of infrastructure and services if financed by the sale
of land. In fact, the use of the land readjustment technique in
Japan and the Republic of Korea has virtually stopped when rapid
land value increases took place in the 1980s.
Second, as there are no incentives to maintain low prices on land
and no other built-in mechanism for inexpensive housing, the method
has been criticized for not being effective in reducing the huge
shortage of low-income housing in most Asian cities. While it is
important to maintain the incentive for landowner participation,
it can be argued that the profit margin is unreasonably high and
that the role of the public sector as partner should be recognized
in sharing the profit. The public sector should therefore aim for
more than cost-recovery.
Third, as the concept of the land readjustment technique is based
on private-public cooperation and negotiation, it requires large
human resources both in terms of numbers and qualifications. In
particular, skilled negotiators and valuers must be available. In
most Asian countries, there is a shortage of skilled staff in the
Government, especially at the municipal government level.
There are several important prerequisites for the successful implementation
of land readjustment:
1. It must be supported by the national, regional and municipal
governments. It is important that the national Government provides
regulations and guidelines to ensure fairness in the system;
2. The land readjustment agency must be given powers to coordinate
and to get access to assistance from various government departments;
3. The land registration and cadastral system needs to be efficient;
4. There has to be a sufficient number of skilled and highly
dedicated negotiators at the local level as well as objective
and well-trained land valuers;
5. As the method is based on public/private cooperation, the
majority of the landowners should support the use of the technique.
Forceful acquisition of land should be avoided.
Land readjustment projects work best when they are implemented
in small to medium-sized areas. Phasing could be used within larger
areas. Faster implementation would reduce the disturbance of the
landowners and the impact from market fluctuations on land values.
Another recommendation would be to use land values rather than size
It is important to recognize that land readjustment is merely a
land development method and should be regarded as a complement to
other methods. It will never be a panacea to the staggering shortage
of housing and infrastructure in developing countries. The method
is especially useful when:
1. scattered and unsuitable subdivisions hinders private sector
2 older urban structures should be reorganized; and
3. there is a need for extensive provision of infrastructure
Guided land development uses the provision of infrastructure
as a mechanism to guide urban development. It is done in partnership
with landowners who pay for the cost of servicing their land through
donation of land for public infrastructure and payment of a betterment
One of the traditional government functions has been to provide
urban infrastructure, particularly bulk infrastructure and services
such as primary or arterial roads, trunk water and sewerage etc.
Governments can use infrastructure investment policies to guide
the direction of land development, as well as, to ensure that land
development is efficient, environmentally sound and equitable.
As discussed earlier most urban development occurs in the urban
fringes where rural land is converted to urban uses. Guided land
development (GLD) is a land management technique for guiding the
conversion of privately owned land in the urban periphery from rural
to urban uses. Guided land development has been proposed for Indonesia
but is yet to be implemented. It uses a combination of traditional
government role of providing infrastructure and the enforcement
of land subdivision regulations. The key advantage of the approach
is that it is less costly than outright land acquisition and more
equitable than land banking.
The principle behind guided land subdivision is that the government
agency entrusted with urban planning or land development proactively
selects the direction where it feels urban development should take
place and provides infrastructure in those areas. This encourages
private land developers to develop land in that area. By not building
infrastructure in other areas acts as a disincentive for private
development in those areas.
The cost effectiveness of guided land development approach results
from the fact that land development is planned, designed and implemented
with the landowners of the designated area, who donate land for
roads and right of way for infrastructure, and public spaces, as
well as, pay a betterment levy to meet the costs of the project.
The betterment levy is justified because of the increase in the
value of land from the provision of infrastructure and from conversion
to urban land use from rural land use.
As landowners are supposed to donate land, as well as, pay betterment
levies, the infrastructure development plan is prepared using both
topographical and land cadastre maps, ensuring that wherever possible
roads and infrastructure follow the existing plot boundaries. To
finance the scheme a loan is initially taken out to build the infrastructure,
which is paid from betterment levies provided by landowners either
on annual installments or in lump sum upon sale of land.
Individual landowners are supposed to subdivide or service their
own lands. In case of subdivision of land adherence to subdivision
regulations is strongly imposed in the designated area.
Guided land subdivision while being quite enticing on paper is
often fraught with difficulties on the ground. First, as the scheme
depends on the consent of the landowners it cannot be applied in
areas with fragmented landownership. Too many landowners mean that
greater time and effort is needed in building consensus. It is very
likely that those landowners who have access to roads will refuse
to participate voluntarily. Landowners may want to continue the
rural use of land.
Second, collection of betterment levies, particularly on an annual
basis may not be acceptable to landowners. Or even if it is acceptable,
they may for various reasons, default on the payments. The option
of holding a land parcel as collateral against default of payment
may not be feasible. Judicial proceedings in civil cases in most
developing countries take several years to complete. This would
mean that the particular parcel of land will be out of the market
until the civil case is settled. Moreover, it may be politically
undesirable to repossess lands of small landowners who are most
likely to default.
The advantages and disadvantages of guided land development are
in fact very similar to land readjustment and land pooling. The
only advantage that guided land development has over land pooling/land
readjustment is that the government does not need to decide on the
amount of land to be returned to the landowners at the end of the
Legislative and fiscal tools
Governments can use legislative and fiscal measures to combat land
speculation. However, these measures are politically difficult to
implement and may in certain cases prove counter-productive.
One legal measure is limiting land that a single juridical person
(individual or corporation) can own. The intent behind such land
ceiling acts is to ensure equitable distribution of urban land.
However, such acts can fragment urban land ownership to such an
extent that land assembly for larger urban development projects
becomes difficult. This kind of law can be easily subverted by individuals
and by corporations which can transfer land titles to family members
or to subsidiary companies.
Moreover, experience has show that redistribution or resale of
expropriated land often takes a long time, effectively taking the
land out of the market. Therefore instead of increasing the land
supply such laws can in fact exacerbate the shortage.
- Land expropriation and land banking
Direct land acquisition is often used by governments to provide
infrastructure and services needed for the well-being of a city.
Most countries have laws which permit governments to purchase or
expropriate private land in the overall interest of society either
at market prices or below market prices. This concept is called
the "power of eminent domain". In most Asian countries eminent domain
legislation has been inherited from former colonial powers. This
legislation often forces landowners to sell their property to the
government. In some countries the legislation also stipulates that
the government can buy the land at prices lower than the market
value of land. This power, in some instances, has been abused by
government agencies, who have expropriated agricultural land around
urban peripheries, at prices lower than the market, developed and
rezoned it to urban land use and sold it to urban investors at much
Land banks are created by buying rural lands around
the city. Governments can use land banks to guide urban development,
fight land speculation, redistribute land to the poor and to finance
Land acquisition in the urban periphery has also been undertaken
to create land banks. The principle behind land banks is that the
government buys large tracts of land, at market prices, in the urban
periphery which have not been brought to use for urban functions.
With this land bank the government can not only direct development
where it wants, by developing this land for urban uses, it can also
combat land speculation by bringing additional developed land on
the market and keeping prices low. It can also be used to redistribute
land to the poor. Another advantage is that government land development
agencies can finance infrastructure expenditure by borrowing from
the capital markets, using the land bank as collateral.
Land banks have proven ineffective because of the
long time needed to purchase land, provide infrastructure and to
sell land to the public.
However, while in principle land banking is a fairly good idea,
in practice it may actually restrict the amount of developed land
in market. Often the land acquisition procedures are very cumbersome
and in some countries it may take as many as 20 years from the time
a land owner is notified about the acquisition to the time land
is purchased. This time-lag effectively takes that particular land
off the market as the land owner can neither develop it nor sell
Moreover, the government bureaucracy is often slow in developing
and selling the land to the public. Time lags in this phase can
also be as much as 5 to 10 years. In fact experience has shown that
most land banks have failed to keep land prices low and combat speculation.
- Capital gains tax on sale of land
Market reactions to fiscal measures are often unpredictable
and can result in unforeseen impacts. A great deal of care is needed
to ensure that they achieve what they were intended to achieve.
A commonly used method of combating speculation is the capital
gains tax. The principle is that the net gain from the sale of land
should be taxed as any other income. Net gain is defined as the
selling price minus the buying price of land and costs incurred
in developing the land.
While capital gains tax works well in developed countries its record
in developing countries is mixed. High value of capital gains taxes
often result in informal transactions of land and may encourage
illegal sub-divisions. These taxes often do not work because land
registration systems are inefficient and not up to date and the
property valuation and taxation systems are corrupt. Landowners
often bribe government valuers to lower the assessed value of their
lands. In addition sellers often declare lower sale prices to avoid
One idea, which has been floated but not as yet implemented in
any country, is self valuation. Under this idea the property owner
declares the market value of the property him or herself. The government,
under eminent domain legislation, reserves the right to expropriate
that land at the self-declared market value. Thus if the landowner
declares a lower than actual market value, the government can expropriate
the land and auction it off. Otherwise the landowner pays the tax
on the declared value.
The problem with this approach is that it assumes that the government
agencies and the legal systems are efficient enough to determine
market values of land and to expropriate land quickly. Given past
experience this is normally not the case in developing countries.
- Taxation of vacant and excess land-holdings
Another approach is to make owning of vacant land unprofitable
by increasing property taxation on vacant land. The intent is to
discourage land speculation and encourage capital investment on
land to utilize it to its full potential. Such laws can unjustly
penalize small investors who buy land for residential purposes or
for starting small businesses, but cannot do so because of a lack
of capital, which they can only assemble over extended periods.
However, measures can be taken to ensure that only large landowners
are covered by such laws.
A combination of land ceiling acts and taxes on vacant land-holdings
is the excess vacant land-holdings tax. The principle behind these
types of taxes is that the government determines how much vacant
land an individual can own in the city. Any land holding in excess
of this is taxed at a much higher rate. Both the vacant land and
excess vacant land taxes suffer from the same implementation problems
as the capital gains tax.
Market reactions to fiscal measures are often unpredictable and
can result in unforeseen impacts. Consequently great deal of care
is needed in designing fiscal measures to ensure that they achieve
what they were intended to achieve.
III. Coping mechanisms of the poor: Informal land markets
Land and housing have especial significance for the
poor. Often a house is not just a shelter it is also a place for
Urban settlements of the poor in the region are characterized by
home based workshops from which the poor earn their incomes.
When the poor are locked out of the formal land and housing markets
they revert to the informal land and housing markets to meet their
needs. Slums, squatter settlements and illegal settlements are often
discussed in the media as being interchangeable or being the same.
However, there are unique characteristics which distinguish each
from the other.
Slums are legal but overcrowded, under-serviced settlements.
Squatter settlements are unplanned, often unserviced illegal settlements.
Illegal subdivisions are organized and planned squatter settlements.
Slums are legal but substandard settlements , with a lack of adequate
services and overcrowding. Slum dwellers could be either renters
of the shelter, or the land or they could be owners of the land
and dwelling. Slums are normally found in the centres of cities,
although it is not uncommon to find slums, where land is rented,
in the urban periphery.
Squatter settlements are settlements where land has been occupied
illegally. They are often found on marginal or environmentally hazardous
lands, such as beside railway tracks, along rivers and canals etc.
They are also found on government land or land whose ownership is
Squatter settlements are spontaneous or organic settlements with
little or no planning. They often start out by a few families finding
a vacant piece of land and establishing a homestead there. If they
are not evicted, some other families build their houses there and
the settlement expands.
Housing conditions can remain substandard for years
if the squatters perceive that there is a threat of eviction. They
often minimize the amounts of capital investment in their housing
because their land tenure is illegal.
In their early stages squatter settlements are characterized by
haphazard settlements patterns, poor quality of housing and an absence
of public infrastructure and services such as piped water supply,
sewerage, roads and electricity. Over time, people find ways of
accessing basic services. In some squatter settlements water is
bought through vendors and charges could be as high as ten times
the municipal water rates. In other cases squatters have been known
to illegally tap into the main water pipe lines to access water.
In many squatter settlements community-based organizations have
lobbied government agencies to provide public stand-pipes or water
tanks in the settlements. Similarly electricity is either accessed
legally, through lobbying with government agencies, or is stolen
from electric lines or is bought from neighbouring formal dwellings.
What is often ignored is sanitation and paved access.
While squatter settlements are spontaneous and unorganized, illegal
subdivisions are planned and organized. These usually occur in cities
where the government owns large tracts of vacant land, with low
opportunity cost, in the periphery of the city.
Illegal settlements are started by unscrupulous land
developers in league with corrupt government officials. Housing
conditions are often better than in squatter settlements because
the perception of secure tenure is higher.
Unlike squatter settlements which are started by dwellers themselves,
illegal subdivisions are started by unscrupulous land developers
who are often in league with corrupt elected and appointed government
officials, including the police. With the protection of these corrupt
officials these developers occupy government land, level it and
subdivide it, according to government planning regulations, planning
space for commercial, residential zones, schools, hospitals, religious
institutions, recreation areas, primary, secondary and tertiary
roads etc. In some cases such settlements were planned by planners
in government agencies after office hours to earn extra income.
They sell these plots, at almost nominal prices, without services
to low-income households in desperate need for shelter. The only
thing they provide is water through tanker trucks. The developers
also ensure that the families will not be evicted by using their
political connections and through bribing the officials concerned.
If the pioneering households find living without services, in the
periphery of the city too difficult and leave, their investment
is confiscated and the plot resold to others.
As the settlement grows the developers usually form a resident's
welfare association which lobbies with government agencies to provide
services. Services such as electricity connections are often illegally
tapped from existing government infrastructure. The developer often
reserves plots with commercial value or corner plots or plots on
wider streets for sale once the settlement is well established.
The housing conditions in these settlements are often better than
in squatter settlements because the perception of secure tenure
is higher. In some ten to fifteen year old settlements surveys have
shown presence of lower middle class families who could not afford
Another example of illegal subdivision is when landowners subdivide
and sell their plots in contravention of government subdivision
regulations. Such subdivisions often pay little attention to health
and fire safety considerations. As the motive behind their development
is maximum profit they often have no provision of public amenities
like parks or open spaces. Furthermore, as they are developed by
individual landowners, narrow roads contravening planning rules
and a lack of coordination of transport access to lands around them
can cause traffic congestion.
IV. Bringing the poor into the formal land market
Poverty can be defined as the lack of security and choices. For
the poor these two elements are missing in the land and housing
markets. They have very little choice as far housing is concerned
and consequently, have to live and work in informal and illegal
settlements. Moreover, they also do not have secure tenure in these
Poverty can be defined as the lack of security and
choices. The key to sustainable poverty alleviation is to enable
the poor to operate in formal markets like other citizens.
The key to sustainable poverty alleviation is not to make the poor
dependent on governments or non-governmental organizations but to
empower them to increase their security and choices. In other words
to enable the poor to operate in formal markets like other citizens.
Experience has shown that bringing the poor into the formal land
and housing markets needs a two pronged strategy: increasing the
choices available on the supply side and increasing affordability
on the demand side.
Increasing supply of land for the poor
Early attempts by governments in developing countries to provide
low-income housing focused on the provision of fully serviced public
housing units. Urban migrants and squatter settlements were treated
with open hostility. They were generally considered as "dead weight"
slowing down the process of development and their illegal settlements
were often flattened with the help of bulldozers.
As it became increasingly obvious during the 1960s and 1970s that
attempts to curb rural-urban migration would not succeed and government
housing programmes were completely incapable of keeping pace with
the enormous demand, there was a growing awareness that alternative
methods would have to be found. Many experts (John Turner being
the foremost) advocated that if low-income groups were provided
security of tenure and, depending on the financial resources of
the government, some basic infrastructure, residents would with
time gradually improve their housing. It was argued that the role
of the government in housing should be changed to be an enabler
rather than provider. The enabling role has ironically been supported
by both liberal and conservative groups, the first mainly because
it empowers local community groups and the latter because it reduces
the burden on the public purse.
Sites-and-services schemes provide the target group with a plot
and basic infrastructure, such as water, roads and sanitation facilities.
The beneficiaries either lease or buy the allocated land. Often,
they are provided access to a loan with reasonable terms as well
as an additional loan for the construction of a house. Although
typically not included in the project, it is expected that the plot
owner would eventually build a house of reasonable standard. During
the 1970s and 1980s, sites-and-services schemes were implemented
in nearly 100 countries mostly on the behest of international agencies
like the United Nations and the World Bank.
Sites-and-services projects, while being a better
option than government built housing, have often failed to meet
the housing needs of the urban poor.
It is difficult to give a description of a "typical" sites-and-services
scheme as the interpretation of the concept varies substantially.
Some project only provide pegged-out lots, unpaved roads and footpaths
as well as communal pit latrines and water-taps while others may
even include paved roads, a utility wall and a partly finished house.
There are many physical components to be considered within schemes.
First, a utility wall may be provided which includes main service
connections such as water supply, electricity and sewerage. Other
projects may have a sanitary core while another solution is communal
utilities with the option to provide individual connections.
Second, the layout of the area depends largely on the planned lot
sizes, accessibility to roads and footpaths, and topography. Often
the importance of the topography has been neglected. Projects have
been built on hillsides and in swampy areas with serious implications.
Communal or individual pit latrines also have an impact on the lot
sizes and therefore indirectly on the population density. Using
individual pit latrines requires physical space for two latrines
as one will be in use.
Third, some schemes have included the construction of posts and
a roof, features which are both expensive and difficult to build.
In other instances some walls or a room have been provided as a
temporary solution while the household built their house.
The World Bank introduced two terms as general principles of sites-and-services
schemes. First, the term 'accessibility' was used to indicate that
the target group (the medium-income bracket of the low-income group)
should gain access to the sites in World Bank schemes. However,
because of excessive standards and high costs, the targeted group
often decided to sublet or sell the site and move back to an area
close to his/her original squatter settlement. Second, because of
the magnitude of the problem and the limited resources of government,
the term 'replicability' was an integral part of all projects. However,
for several reasons very few of these projects managed to break
even financially. Three out of four programmes failed to recover
the incurred costs and, subsequently, the World Bank's support to
sites-and-services schemes and squatter settlements has decreased
Cost-recovery has been difficult partly because of the high expenses
which allottees typically have to bear early after moving into the
area. They would have to pay for the infrastructure and construction
of the house, while, at the same time, they may either have high
transportation costs to their old work place or have not been able
to find a source of income in the new area. Furthermore, the method
has also been expensive for governments as they were typically required
to provide land which became expensive, mainly because of land price
increases and, to some extent, land speculation.
Many other problems have been encountered with sites-and-services
schemes over the years and gradually settlements upgrading has become
a more favoured government response to the needs of low-income groups.
- Illegal settlements regularization/upgrading
Although the sites-and-services approach offers many opportunities,
it is not a feasible method for providing housing to the majority
of urban low-income residents because of the huge shortage in the
existing housing stock and high costs. Settlement upgrading is based
on investments already made in the existing housing stock and is
therefore less costly to implement. Settlement upgrading provides
existing settlement dwellers land tenure, as well as, basic infrastructure.
Squatter settlement regularization/ upgrading is a
better option as it provides land to the poor near their work-place,
does not disrupt the integrity of the community and takes into account
the investments the poor have already made in their settlements.
The Kampung Improvement Programme (KIP) in Indonesia probably rates
as the foremost settlement upgrading achievement in the world. The
objectives of the programme were to provide access roads, footpaths,
drainage, sewage solutions and drinking water and social facilities
such as schools and health centres for urban low-and medium income
groups in Indonesia's popular kampung settlements. KIP/Jakarta,
alone, has improved more than 500 kampungs and provided basic services
to about 3.8 million people. Indonesia's five-year-plan for 1989-1994
was to be implemented in 500 cities and included projects for urban
renewal encompassing settlement upgrading programmes.
KIP is also a good example of the importance of local support for
upgrading programmes. When the programme was introduce in 1969 it
had a top-down design where officials analyzed communities and imposed
their solutions. However, as local resistance increased it was realized
that the programme had to be reorganized to involve residents in
community-based organizations. Residents became much more enthusiastic
and it was found that they were also willing to provide substantial
amounts of funds. Today, KIP is an established method and its effectiveness
in the provision of basic infrastructure is well recognized.
Successful squatter settlement regularization/upgrading projects
have the following characteristics:
1. Upgrading projects are relatively cost-effective in a situation
of high demand for shelter and services.
2. Upgrading projects are most successful if they are simple
and down to earth. Basic programmes of service provision were
relatively successful, whereas additional components such as
income generation and home improvement credit have been less
effective. Simple programmes have extended coverage and ensure
3. Components to improve land tenure had to be carefully implemented
to enhance the perceived land tenure security, as well as, to
4. Community participation was essential for the success of
5. Participatory approaches in all stages: concept development,
planning of layout, decision making on level of services and
implementation were extremely important to the success of projects.
Land-sharing has been implemented with success in Thailand and
to a lessor degree in the Philippines. The concept behind land sharing
is that the landowner and the land occupants (squatters or tenants)
reach an agreement whereby the land owner develops the economically
most attractive part of the plot and the dwellers build houses on
the other part with full or limited land ownership. Land-sharing
offers several advantages as governments are finding it increasingly
difficult to find land for sites-and-services and other public housing
schemes in locations near income-generating activities, and eviction
is increasingly becoming an unacceptable method to clear land for
development projects. Through land-sharing both parties gain: the
landowner can obtain the most desired land and the occupants can
continue living in the area, with secured tenure.
Both the landowner and the squatters benefit from
land sharing. Squatters get to stay on the land legally while the
land owner can sell or develop a portion of the land and avoid long
The land occupants base their right to the land on possession.
It is common in many rural and traditional societies that occupants
obtain a right to the land by living on it and the claim on the
land gets stronger the longer the land is occupied. Furthermore,
urban development creates land values as a result of investments
by the public sector rather than by the landowner. Occupants can,
therefore, be considered as having a certain right to these increased
land values as well.
The are four basic characteristics of land-sharing projects.
1. Densification. The occupants will be rehoused
on a smaller area as the land will partly be developed by the
2. Reconstruction. Densification typically
implies that new buildings will replace older structures. It
is often necessary to build row-houses or walk-up apartments
to allow higher densities;
3. Participation. The transformation of the
plots will require a comprehensive negotiation process whereby
the community will discuss the allocation of plots and the construction
modalities with the landowner, often with the help of a mediator.
It is necessary to include all dwellers in the project and to
be able to reach agreements within the community;
4. Cross-subsidy. External subsidies should
be avoided as much as possible. The commercial development should
generate a sufficient surplus to cover a deficit resulting from
the community's inability to pay for much of the cost of land,
infrastructure and possibly housing.
The potential for land-sharing appears rather unfavourable, as
the law and many politicians support the landowner and many slum
dwellers accept the landowner's right to terminate a lease contract
and to evict them with no or a small compensation. Partly supported
by non-governmental and community-based organizations, slum communities
have increasingly become aware of their rights. Community leaders
often risk harassment, fines and being arrested. Whereas negotiations
between landowners and communities are used more and more often
to solve problems, it is still common for landowners to resort to
arson in order to clear slum communities. The reasons for landowners
participating in a land-sharing project appears to be either as
an act of charity and merit-making or as the last way out of a conflict
situation between the landowner and the community which is receiving
embarrassing public attention. Experience has indicated that the
chances of reaching an agreement increases if the community can
ask a third party to negotiate. It is also imperative that the community
stays united in negotiations with the landowners.
In most land-sharing projects, the land belonged to the public
sector and the slum dwellers stayed in the area after land development
was completed. It is interesting to note that the type of development
(rental or home ownership) depended on other factors than on the
amount of land available for the slum community.
Some of the problems which have been encountered with land-sharing
1. Availability of land. Often the land available
is too small and/or the population density too high within slum
communities. Furthermore, this shortage of land may force the
building of walk-up apartments which are generally unpopular
among slum dwellers.
2. Community cohesion. A land-sharing project
requires considerable cooperation efforts among slum dwellers
who often have a different background. This is particularly
a problem during the allocation of plots.
3. Complex and time-consuming. The necessity
of community participation and agreement throughout the complex
process is very time-consuming. The delay in implementation
has typically led to increased costs. Furthermore, there is
a problem with enforcement as there are no clear rules and each
individual household has so far had the powers to block all
Land-sharing can only take place where slums live under a serious
threat of eviction as the community otherwise feels no need for
change. Although land-sharing can rarely be used because of the
many preconditions which have to be met, it is one of the very few
methods through which slum dwellers can gain formal access to land
without considerable subsidies.
- Sites without services: incremental development
Incremental development can be described as a sites-and-services
scheme without the services. The approach includes mechanisms whereby
groups of households are encouraged to organize themselves, accumulate
funds and to provide infrastructure gradually. Construction begins
when the group has collected a certain percentage of the required
funds. The approach has been implemented in the United Republic
of Tanzania, Zambia, India and in Pakistan.
Through the incremental development scheme the government
seeks to establish a planned and legal squatter settlement. Infrastructure
and services are provided incrementally when the residents are able
to pay for these.
As with illegal settlements, no infrastructure is provided except
perhaps drinking water. The method has the advantage that costs
are kept as low as possible thereby allowing access to land for
the low-income group. A study of the Pakistan case provided the
The idea arose from the success of squatter settlements and the
failure of government sites-and-services schemes. The concept behind
the Incremental Development Scheme is very simple. Instead of replicating
models like the sites-and-services schemes government should follow
the existing successful practices on the ground, maximizing its
positive aspects and minimizing its negative aspects. Squatter settlements
meet the housing needs of the poor but are built without any planning.
Through the incremental development scheme the government seeks
to establish a planned and legal squatter settlement in which infrastructure
and services can be provided on an incremental basis when the residents
have accumulated capital to pay for the infrastructure and services.
Thus for example, when a group of residents can accumulate enough
capital to pay for piped water, the government agency provides piped
water. Once they have piped water they can save for electricity,
paved roads, etc.
One of the restrictions imposed on the beneficiaries was that they
had to live on their plots and save money in community groups for
the provision of infrastructure. Similar to conditions imposed on
squatters by illegal land subdividers. Such schemes have the potential
of reaching the poorest of the poor as only those in desperate need
of shelter will live on land with minimal infrastructure and services.
Such schemes work best in environments where governments own large
tracts of land in the urban periphery.
Increasing effective demand for land for the poor
While the above techniques discussed ways of providing low-cost
land to the poor, this section will discuss ways of increasing the
effective demand of the poor. Traditional government approaches
have concentrated on subsidizing the poor. However, in most instances
this policy has not worked. The key problem with subsidies is that
with scarce resources, most governments have been unable to subsidize
all the poor who need housing.
Subsidizing the poor is not sustainable. Subsidies
often miss the targeted group and make the poor dependent.
Moreover, subsidies are not sustainable and often do not reach
the intended target group. Experience of sites-and-services and
built housing has shown that often the middle classes and the rich
benefit from subsidies rather than the poor. Furthermore, subsidies
in general, make the poor dependent on the subsidizer, be it the
government or a non-governmental organization
Effective demand is defined as demand for a good or service which
can be paid for. There are two basic elements to increasing the
effective demand of the poor: organization and access to finance.
The poor as individuals are seldom able to afford land and housing.
Experience has shown that the poor as a group are able to afford
not only land but also housing. They are also better able to negotiate
with the government or the private sector as a group rather than
as individuals, as has been proven in the case of land sharing.
There are several examples of poor communities organizing themselves
to provide for their own housing.
Organized and articulate communities of the poor can
not only afford housing, they can also negotiate with governments
and other actors more effectively.
Community-based organizations take several forms from welfare associations,
to slum-dwellers federations to coalitions of poor. Communities
often organize themselves when they face a common threat or need,
such as the threat of eviction or the need for water supply. Often
when the threat passes or the need is satisfied, the community organization
disbands or becomes moribund.
Non-governmental organizations have played a major role in organizing
the poor. They have assisted the poor in building their capacities
to work in group environments and to negotiate with government or
the private sector. However, some times NGOs, either on purpose
or inadvertently, make communities dependent on them for technical
and management assistance. Such NGOs do not help the poor. They
simply provide justification for their own existence.
- Increasing savings and providing access to finance
As stated earlier community organization has taken place when the
poor feel threatened or have to satisfy a common need. The problem
is often sustaining community organizations once the threat is removed
or the need is satisfied. One way of accomplishing this is through
community-based savings-and-credit schemes. Instead of being reactive
(in response to a threat or a need) these schemes are proactive
and therefore more sustainable. They not only organize communities
but also increase the effective demand of the poor by increasing
their savings and providing access to credit.
Community-based savings-and-credit schemes preserve
organized communities and increase the status of women in the community
in addition to providing access to finance.
It should be noted that the poor are not without income. What they
lack is capital. This is because they cannot access capital at market
rates and have to resort to borrowing from money lenders who often
charge them as much as two to ten percent interest per day. Formal
lending institutions, such as banks, often require collateral which
the poor cannot provide. The poor feel intimidated or unable to
deal with banking procedures which require high levels of literacy.
Moreover, the amounts that they want to borrow are often so small
that banks do not find it profitable to lend them the money. Experience
has shown that community-based savings-and-credit schemes assist
the poor in increasing their incomes and capital.
Governments can assist this process by creating finance
facilities which act as reserve banks for these "mini banks of the
Successful community-based savings and schemes often operate on
the Grameen Bank model, where small groups of the poor serve as
collateral guarantors for borrowers in their group. Since the scheme
is managed by the community the approach to loans and savings is
flexible. Savings are collected daily or weekly by volunteers in
small amounts suitable to the saver. Loans are often given five
to six months after the saver has shown his or her ability to save
regularly, mostly for economic activities. Often the group that
guarantees the loan decides whether the purpose for which money
is being borrowed is economically feasible. The amount of the loan
is usually small. A borrower can borrow a bigger amount after the
first loan is completely paid off. Interest rates are often higher
than what the banks charge but much cheaper than the rates of the
Women are normally far more active in such schemes than men and
such schemes often lead to increasing their social and economic
status in society. In many countries these savings-and-credit schemes
have formed federations or loose coalitions and as such control
Some governments have supported this process by creating a finance
facility which provides capital to federations of community-based
savings-and-credit schemes. The facility acts as a reserve bank
for these "mini banks of the poor". It not only provides credit
at market rates, it also provides technical advice on management
of savings-and-credit schemes and using them as an entry point for
other community-based development activities.
V. Land policy formulation and implementation
The process of formulating and implementing land policies is not
only politically and technically difficult, it can also be costly.
However, the costs of not formulating and implementing them are
The key to formulating effective policies is understanding the
existing realities and processes on the ground and reducing their
negative impacts and maximizing their positive impacts.
Objectives of an urban land policy
Participatory approaches to policy formulation and
implementation often result in building a constituency for reform
and can serve as an important tool for creating political will.
Urban policies are often prepared on a piece-meal basis in reaction
to specific demands from interest groups. This type of adhoc policy
formulation often creates more distortions in the urban economy.
Governments need to formulate clear objectives for any urban land
policy. While specific objectives would vary from country to country
the overall objective of any urban land policy should be to ensure
that land markets are efficient, equitable and environmentally sound
Process of formulating and implementing urban land policies
Before formulating and implementing urban land policies the following
questions need to be answered. These can be lumped into two categories:
understanding the workings of the urban land markets, evaluation
of policy tools.
- Understanding the workings of the urban land markets
The key to formulating effective policies is to first understand
the existing realities and processes on the ground and then to determine
ways and means of reducing the negative impacts of these processes
and maximizing their positive impacts. The questions that need to
be asked in this regard are:
1. What are the inefficiencies, in the urban land markets?
2. What are the impacts of the current urban land markets on
3. What distortions and inequities exist in the urban land
4. What are the factors causing the distortions?
5. What is the cost of the distortions to the urban economy?
6. Who is benefiting from the distortions and inequities?
7. Who is suffering from them?
8. How much political power does each of these groups have
to resist or promote reform?
These questions can be addressed through a detailed land market
analysis. Special care should be given to who undertakes the analysis.
Rather than a government agency, it would be preferable that an
independent institution, such as a research centre or a consultancy
firm be entrusted with the task. The terms of reference should be
clear and comprehensive so that the institution undertaking the
study understands exactly what is expected of it.
It is important that such an analysis is not only technically sound
but it also needs to take the politics of land into account. The
analysis should then be subjected to consultations both through
public hearings or urban forums and through informal consultations
with the various actors in the land market. This process would complement
the analysis and enhance the overall understanding of the urban
land market. Care should be taken to make the process of consultation
and hearings as inclusive as possible. Such a process often results
in the actors themselves suggesting solutions to the problems identified
in the land market analysis.
- Evaluation of policy tools
Once the issues and actors have been identified the following questions
need to be asked:
1. Which policy tools most effectively address the inefficiencies,
inequities and unsustainabilities identified by the land market
2. Which level of government should implement these tools?
3. What extent of technical and institutional capacity is required,
at what level of government, to implement them?
4. Does such capacity already exist? If not, what measures
need to be taken to build the capacity? How much time, human
resources and monetary resources, would be needed to build these
5. What legislation is required, at what level (national, sub-national
or local), to implement these tools?
6. Is there political will to pass the legislation and implement
the policies? If not, how can the political will be created?
7. What would be the time-frame for implementing the policy?
8. What criteria or parameters and mechanisms would be used
to measure success or failure of the policy?
A participatory approach, similar to the one used in understanding
the urban land market, should be used in policy formulation and
implementation. Participatory approaches often result in building
a constituency for reform and can serve as an important tool for
creating political will. While participatory processes are more
effective than one-sided government policy initiatives, they do
consume more time and can at times be frustrating to both elected
and appointed officials who are more used to unilateral actions.
However, their benefits far outweigh their costs.
Further Reading list
Angel, Shlomo, Archer, R. W., Tanphiphat, S. and Wegelin, E. A.,
eds., 1993. Land for Housing the Poor, (Singapore, Select
Archer, R. W., 1984. "Land Management for Adequate Land Supply
and Planned Land Use in Asian Cities", HSD Working Paper no. 15,
Human Settlements Development Programme, Asian Institute of Technology,
Brennan, Ellen M., 1993. "Urban Land and Housing Issues",
in Kasarda, John D. and Parnell, Allan M., eds., Third World
Cities. problems, policies and prospects (Newbury Park, United
States of America, Sage Publications).
Doebele, William A. 1987: "Land Policy", in Rodwin, Lloyd eds.,
Shelter, Settlement and Development (Hemel Hempstead, United
Kingdom, Unwin Hyman Ltd).
Dunkerley,Harold B., ed., 1983. Urban Land Policy - Issues and
Opportunities (New York, Oxford University Press).
Dowell, David E. and Giles Clarke, 1991. "A Framework for Reforming
Urban Land Policies in Developing Countries", Urban Management Programme
Discussion Paper no. 7, The World Bank, Washington DC.
ESCAP, 1994. Urbanization in Asia and the Pacific ST/ESCAP/1334
(New York, United Nations).
ESCAP, 1993. State of Urbanization in Asia and the Pacific 1993
ST/ESCAP/1300 (New York, United Nations).
ESCAP, 1985. Land Policies in Human Settlements. A regional
overview on current practice towards more effective utilization
of urban land ST/ESCAP/343 (New York, United Nations).
ESCAP/CITYNET, 1995. Municipal Land Management in Asia: A Comparative
Study ST/ESCAP/1539 (New York, United Nations).
Farvacque, Catherine and McAuslan, Patrick, 1992. "Reforming Urban
Land Policies and Institutions in Developing Countries", Urban Management
Programme Discussion Paper no. 5, The World Bank, Washington DC.
Rodwin, Lloyd, ed., 1987. Shelter, Settlement and Development
(Hemel Hempstead, United Kingdom, Unwin Hyman Ltd).
Hall, Peter, 1976. "A review of Policy Alternatives",
in Kehoe, David and others, eds., Public Land Ownership: Framework
for Evaluation (Toronto, York University).
Land registration and information
Chalawong, Yongyuth and Gershon, Feder, 1988. "The Impact of Landownership
Security: Theory and Evidence from Thailand", The World Bank
Economic Review vol. 2, No. 2, Washington DC.
Dale, Peter F. and McLaughlin, John D. 1988. Land Information
Management - An introduction with special reference to cadastral
problems in Third World countries (Oxford, Clarendon Press).
Larsson, Gerhard, 1991. Land Registration and Cadastral Systems:
Tools of Land Information and Management (New York, Longman
Scientific & Technical).
Archer, R.W, 1991. "Provision of Urban Infrastructure through Land
Subdivision Control in Thailand", HSD Research Paper no. 26, Asian
Institute Technology, Bangkok.
Brammer, Hugh, 1984. "Land Use Planning in the Tropics" ADAB
News vol. XI, No. 1, Dhaka.
Choguill, C.L., 1994. "Urban Planning in the Development World"
Urban Studies vol. 31, No. 6, Australia.
Moore, Terry, 1978, "Why Allow Planners to Do What They Do? A Justification
from Economic Theory", Journal of the American Planning Association,
vol. 44, United States of America.
Paulsson, Bengt 1992. "Urban Applications of Satellite Remote Sensing
and GIS Analysis", Urban Management Programme, Discussion Paper
no. 9, The World Bank, Washington DC.
Land development approaches
Acharya, Ballabh Prasad, 1987. "Policy of Land Acquisition and
Development - Analysis of an Indian Experience" Third World Planning
Review vol. 9 No. 2, Liverpool University Press, United Kingdom.
Archer, R.W. 1987. "Transferring the Urban Land Pooling/Readjustment
Technique to the Development Countries of Asia", HSD Working Paper
no. 24, Human Settlements Development Programme, Asian Institute
of Technology, Bangkok.
Baker, Lee 1991. India, Private/Public Partnership in Land Development
(Washington DC, Office of Housing and Urban Programs, USAID).
Billand, Charles J. 1990. Delhi Case Study: Formal Serviced
Land Development (Washington DC, Office of Housing and Urban
Billand, Charles J., 1993. "Private Sector Participation in Land
Development - Guidelines for Increasing Cooperation between Local
Government and Private Developers" Habitat International
vol. 17, No. 2. Pergamon Press, United Kingdom.
Devas, Nick, 1983. "Financing Urban Land Development for Low Income
Housing - An Analysis with Particular Reference to Jakarta, Indonesia"
Third World Planning Review vol. 5, No. 3., Liverpool University
Press, United Kingdom.
Doebele, William A., 1982. Land Readjustment (New York,
D.C. Heath and Company).
Kim, Tae-Il 1987. "Land Readjustment in Seoul - Case Study on Gaepo
Project" Third World Planning Review vol. 9, Issue 3, Liverpool
University Press, United Kingdom.
Legislative and fiscal tools
Courtney, John M., 1983. "Intervention through Land Use Regulation",
in Dunkerley, Harold B., ed. Urban Land Policy - Issues and Opportunities
(New York, Oxford University Press.
Dillinger, William, 1991. "Urban Property Tax Reform: Guidelines
and Recommendations" Urban Management Program Discussion Paper no.
11, The World Bank, Washington DC.
Dowell, David E., 1991. "The Land Market Assessment - A New Tool
for Urban Management" Urban Management Programme Discussion Paper
no. 4, The World Bank, Washington DC.
Kidokoro, Tetsuo, 1992. "Development Control Systems for Housing
Development in Southeast Asian Cities" Regional Development Dialogue
vol. 13, No. 1, UNCRD, Nagoya, Japan.
Kitay, Michael G. 1985. Land Acquisition in Development Countries:
Policies and Procedures of the Public Sector (Boston, Lincoln
Institute of Land Policy).
Low income housing
Aliani, Adnan Hameed 1988. "Incremental Development Scheme: An
Innovation in Sites-and-Services Schemes and an Alternative to Illegal
Subdivisions in Hyderabad, Pakistan" master thesis no. HS-88-5,
Asian Institute of Technology, Bangkok.
Fernandez, Keneth, 1997. How Communities Organize Themselves,
(Karachi, City Press).
Gilbert, Alan and Gugler, Josef, 1993. Cities, Poverty and Development
- Urbanization in the Third World (New York, Oxford University
Hasan, Arif, 1997. Working with Government: The Story of OPP's
Collaboration with State Agencies for Replicating Its Low-cost Sanitation
Programme. (Karachi, City Press).
Institute for Housing and Urban Development Studies, 1993. Urban
Relocation: Policy and Practice-Proceedings of the Expert Meeting
on Urban Relocation, Rotterdam, February 1992 (Rotterdam, IHS).
Islam, Prachumporn Panroj and Yap Kioe Sheng, 1989. "Land-Sharing
as a Low-Income Housing Policy - An Analysis of its Potential",
Habitat International vol. 13, No. 1, Pergamon Press, United
Murphy, Denis, 1993. The Urban Poor - Land and Housing (Quezon
City, the Philippines, Claretian Publications).
Peattie, Lisa R. 1982. "Some second thoughts on sites-and-services"
Habitat International vol. 6, No. 1/2, Pergamon Press, United
Skinner, Reinhard J., Taylor, John L., and Wegelin, Emiel A., 1987.
Shelter Upgrading for the Urban Poor. Evaluation of Third World
Experience (Manila, Island Publishing House Inc.).
Turner, J.F.C., 1976. Housing by people (London, Marion
van der Linden, Jan, 1976. The Sites-and-services Approach Reviewed
(Brookfield, Gower Publishing Company)
UNCHS, 1991. The Incremental-Development Scheme. A Case Study
of Khuda-ki-Basti in Hyderabad, Pakistan (Nairobi, Kenya, UNCHS/Habitat).
Yap Kioe Sheng, ed., 1992. "Low-income housing in Bangkok. A review
of some housing sub-markets", HSD Monograph 25, Asian Institute
of Technology, Bangkok.