land policies for the uninitiatied
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 housing markets.
By the year 2025, most Asians will be urban dwellers. How well
cities function as a system will determine the future of Asia.
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
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
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
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
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 supply side.
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
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 of poverty.
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 land subdivisions.
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 of origin.
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 conveyance system.
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 and Kenya.
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
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.
Security of credit
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 registration system.
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 sensitive matter.
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 registered.
Land Information Systems
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
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
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
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 lot size.
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 standards.
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
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.
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 scattered.
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 housing.
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
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
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
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
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 of area.
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 land development;
2 older urban structures should be reorganized; and
3. there is a need for extensive provision of infrastructure
Guided land development
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 project.
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.
Land ceiling acts
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 higher prices.
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
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
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
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 taxation.
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 income generation.
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 unclear.
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
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
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
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 housing elsewhere.
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
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
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
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
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
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
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,
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 faster implementation.
3. Components to improve land tenure had to be carefully
implemented to enhance the perceived land tenure security,
as well as, to recover costs.
4. Community participation was essential for the success
of upgrading programmes.
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
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
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 legal
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 land owner;
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 major decisions.
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,
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
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 poor".
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 money lenders.
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 sizable capital.
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
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 much higher.
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 and sustainable.
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
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 the environment?
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
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
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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,
Rodwin, Lloyd, ed., 1987. Shelter, Settlement and Development
(Hemel Hempstead, United Kingdom, Unwin Hyman Ltd).
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in Kehoe, David and others, eds., Public Land Ownership: Framework
for Evaluation (Toronto, York University).
Chalawong, Yongyuth and Gershon, Feder, 1988. "The Impact of
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Land Subdivision Control in Thailand", HSD Research Paper no.
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Justification from Economic Theory", Journal of the American
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Paulsson, Bengt 1992. "Urban Applications of Satellite Remote
Sensing and GIS Analysis", Urban Management Programme, Discussion
Paper no. 9, The World Bank, Washington DC.
Acharya, Ballabh Prasad, 1987. "Policy of Land Acquisition and
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Planning Review vol. 9 No. 2, Liverpool University Press,
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of Technology, Bangkok.
Baker, Lee 1991. India, Private/Public Partnership in Land
Development (Washington DC, Office of Housing and Urban Programs,
Billand, Charles J. 1990. Delhi Case Study: Formal Serviced
Land Development (Washington DC, Office of Housing and Urban
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Government and Private Developers" Habitat International
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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.
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).
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
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,
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
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Peattie, Lisa R. 1982. "Some second thoughts on sites-and-services"
Habitat International vol. 6, No. 1/2, Pergamon Press,
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van der Linden, Jan, 1976. The Sites-and-services Approach
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