U rbanization Review

Diagnostics and Policy Priorities for Urbanization

As many countries continue their journeys into middle incomes and beyond, how can urbanization amplify economic prosperity and reduce poverty? How can policies and investments be prioritized to address pressing challenges at different stages of urbanization? The Urbanization Review identifies bottlenecks in key institutions that regulate: land use & transformation, provide basic services, and connect people and prospering places factors that have accompanied rapid progress in todays developed countries. We apply diagnostic tools to provide policymakers with a clear picture of the tradeoffs associated with alternate policy and investment choices.

World Bank , Finance Economics and Urban Department

Image source: NASA

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Cosponsored by World Bank State Secretariat for Economic Affairs , Switzerland Cities Alliance

Policy debates in many countries have focused on the ills of urbanization

Negative consequences of urbanization for rural development

Ghana, India, Sri Lanka, Uganda

Economic growth and people need to be diverted towards small cities

Ghana, Brazil, India, Turkey

Slums are unproductive and need to be cleared

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However, limited consensus on policies that can balance efficiency, equity and sustainability Which policies? When? In what sequence? Where? UR

 Challenges.

Need to identify policy priorities and highlight trade-offs

Urbanization shaped by multi sectoraland multi jurisdictional processes and policies But policy discourse, development assistance, and research on urbanization often run within jurisdictional and sectoral silos

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Diagnostic focus
Common Institutions
Fluid land markets: economic concentration Basic services: convergence of social indicators

Connective Infrastructure
Extra urban: product market integration Intra urban: labor market integration

Targeted Interventions

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Remedial: identify government failures visible in slum formation Social: identify market failures such as

Land policies and fluid land markets

Rural-Urban Transformation
What are policies regulating rural land use change for urban uses? What principles and mechanisms are used to value land? How is compensation provided to original landholders?

Urban Form and Efficiency

Which urban regulations have constrained the supply of land? How do these distortions influence urban form and property prices?

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Sri Lanka: restrictions on sale, lease and use of land

LDO restrictions slow the pace of transformation out of agriculture

Land market restrictions also keep poor people poorer as they earn less per for their labor (less diversification)

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India: Excessively high land rents in metropolitan areas signal policy distortions
Delhi
80 percent of Tokyos office rents; 10 percent of income (India)

Mumbai
124 percent of Singapore s office rents; 12 percent of income

Prices much higher than what city fundamentals would suggest Bangalore -- look at FSI , Zoning , public land ownership and developer financ

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75 percent of

India: Access to basic services much worse in secondary cities and rural areas

Data source: Census 2001

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Colombia: Convergence in access to basic services across the urban portfolio

Electricity
100%

Water

Sanitation

75%

50%

25%

0%

BogotaLargest

Smallest BogotaLargest

Smallest BogotaLargest

Smalle

1964

1993

2005

Beyond service a recent study that almost 60 largest cities

access, improving quality will be important -collecting drinking water samples highlights percent of the samples taken outside the failed to meet minimum quality standards

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 Infrastructure improvements can lower transport costs and connect the portfolio of settlements
Facilitate movement of people (rural urban linkages) Facilitate movement of products (trade and specialization across cities)

Connective infrastructure (extra urban)

What investments are being planned to lower transport costs? What are the efficiency tradeoffs among alternate investment choices?
Modal composition, location preferences

Are costs tempered by the market UR structure of the transport industry?

Sri Lanka: prioritize investments to connect remote areas or agglomerations with trade potential?

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Savings in transport expenditures

India: Informing investment priorities metropolitan transport or long distance connectivity

S u rve y a l n g 4 5 R o u te s o Freight rates for short distance (less than 100km) transport is on average as high as Rs. 5.2 per ton km (US$ 0.12) between large cities and their immediate hinterland Use of old trucks + high rates of empty backhauls

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Urban Mobility (intra urban)

Congestion costs can dampen gains from economic concentration in rapidly growing urban areas
What investments and policies have been used to maintain urban circulation? Have policies avoided lock-ins into unsustainable urban form (integrated land use and transport to maintain flexibility)

Separately consider supply and demand side interventions

Which supply side measures have been used to manage congestion (road expansion, BRTs, metros) and have they been effective or efficient? Which demand side measures congestion pricing,

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Remedial interventions
Housing interventions
What share of urban households live in slums? What are government programs to improve housing conditions for the poor? What citywide investments have preceded or accompanied housing interventions?

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Colombia: combining zoning deregulation, access to finance and upgrading

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S h a rp w h e n p re ce d e d b y p ro g re ssi l n d p o l ci s a n d co n n e cti ve a i e v i fra stru ctu re n

Framework for sequencing policies and investments

Institutions Infrastructure Interventions
(public and private sectors) (Correcting government failures and managing market failures)

Early
Enable private markets, provide social services soft structures

Intermediate
Connective infrastructure hard structures

Advanced

Compensating and countervailing interventio

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Recognize the most important market forces ; Release constraints on the key factor markets

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India (early) Sri Lanka Vietnam Indonesia China (intermediate) South Africa Brazil (advanced) Colombia South Korea

Pilot Urbanization Reviews

Timeline
Toolkit report World Bank/ SDN flagship: March 2012 Country Pilots December 2011 Rollout ongoing

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Thank You
Somik V. Lall (slall1@worldbank.org) Austin Kilroy (akilroy@worldbank.org) Nancy Lozano ( nlozano@worldbank.org) Hyoung Gun Wang ( hwang4@worldbank.org)

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