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Land and Housing for the Urban Poor
Diagnosis and National Strategy†
José Alejandro Bayona
Director – Urban Development and Environmental Policy Direction National Planning Department
and
Diego Andrés Villamizar Consultant
The World Bank [email protected]
Summary
This paper using four case studies makes the diagnosis on the conditions of the land and housing markets for the urban poor. The diagnosis evaluates three characteristics of these markets: i) the patterns of land occupation during the second half of the 20th century; ii) the costs associated to the selection of the housing settlement; and iii) the local institutional capacity to exert urban control. The main findings are that: a) poor regional coordination, among others, have caused that cities have not been able to provide enough land to match the demographic pressures, generating incentives for informal settlements; b) informal settlements are not necessarily less costly than formal ones, if we consider the welfare impacts on the population that locate there; and c) local governments show a deficient institutional capacity to perform an adequate urban control on their territory. Based on these results it has been conclude that the national government should get more involved in the design and participation in the strategies to improve the provision of land and housing for low-income households, focusing on three main areas: 1) the improvement of regional planning mechanisms, 2) the application of land management instruments, and 3) the creation of incentives to the production of formal housing solutions. Key words: Urban growth, urban policy, housing
March 2007
†
This document is the result of the cooperation between Cities Alliance, The World Bank, the Colombian National Planning Department and the Colombian Ministry of Environment, Housing and Territorial Development.
2
I. Introduction This document collects the most significant findings of the diagnosis studies prepared on the frame of the Land and Housing for the Urban Poor project undertake by the Colombian National Government and financed with a Cities Alliance grant. The diagnosis studies were elaborated by the Development Planning Unit at University College London –DPU- (2006) and by the Studies Centre on Economic Development at the University of Los Andes –CEDE- (2006). During the last half of the twentieth century, like most Latin American countries, Colombia has shown a strong tendency towards the concentration of its population in the urban areas. While in 1950 the people living in urban areas accounted only for the 39% of the total population, in year 2005 more that the 75% of the country’s population was living in the municipalities’ urban areas. This high urbanization rate ought to be understood as a source for a faster development. In fact, combined effects as economies of scale and agglomeration favor productivity and facilitate the provision and exchange of good and services. The cities in Colombia are the main source of economic growth, since the majority of the most productive sectors are located in them. Some basic statistics confirm this view, in the principal seven cities of the country live the 40% of the household in the country and it is generated the 60% of the total income of the households. Only Bogotá, the Capital District, concentrates the 18% of the households and generates more than the 30% of their income1. Although the cities offer higher standards of life quality, the lack of response to the migration and natural growth of the cities in terms of income, housing, social and basic services (especially water and sanitation) create a perfect environment to the spread of urban poverty. Unfortunately, this is the reality of almost every city in Latin America and, of course, in Colombia. This situation worsen if is contrasted with the expectation of population growth. By the year 20192 it is expected that the urban population overcome the 40 millions of inhabitants, growing in more than 10 millions people. So far the cities have not been able to provide the enough worthy housing solutions to its inhabitants. By year 2003 the urban housing deficit was estimated in 2.3 millions houses, where 1.5 millions accounted for the quantitative deficit and the complement (0.8 millions) were qualified as qualitative deficit. The quantitative deficit is the result of subtracting the total number of houses from the total number of households; and the qualitative deficit are those houses that need to be replaced due to their poor specifications. As expected the housing deficit is concentrated in the households with lower incomes, and are these households which have to locate in the urban slums. Living in urban slums usually deprives those households of an adequate access to social services and quality public services, these conditions in addition with the poor housing are usually amongst the most common causes of poverty, then the interaction on low incomes and urban slums creates a poverty trap for these households.
1 Source Quality of Life Survey (ECV), calculations made by DNP: 2 The year 2019 is used as a referent point in time, since it constitutes a milestone given that in that year the country celebrates 200 years since independence.
3
Graph 1 T o ta l H o using D eficit
802,108
1,531,237
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Qualitative deficit Quantitative def icit
C ro ss C o unt ry T ot al Housing D ef icit
64
47
40 40
30
23 2217
0
10
20
30
40
50
60
70
B r as i l Cuba Mex i co Venez uel a Col ombi a Chi l e Ar gent i na Cos ta Ri c a
Source: DANE – ECH and Housing stock; CEPAL/UNECLA Calculations: DNP-DDUPA Despite the significance of the current housing deficit, the evolution of the housing stock in the urban areas since 1973 has shown an important increase in the housing stock in the country. As we can see in graph 2 the number of houses per every thousand inhabitants has grown in near 100 houses in the last 30 years. According to the last population census (2005) the total stock of urban houses is of 7.8 million houses. The calculation of this stock considers both formal and informal housing. This increase in the housing stock has been accompanied by a progressive increase in the affordability of low income housing to low-income households. The social housing accessibility index, which represents the average value of a social housing solution as a proportion of the average income of low-income households, has steadily decreased since 1992, confirming the increase in the affordability of the social housing. Unfortunately, this index does not indicate the effective access to social housing solutions, and as the latest data shows while every year 185.000 new urban households get formed only 94.000 new housing solutions get built.
Graph 2
Urban Housing Stock
1,9
3,9
4,8
7,8
248
205191
157
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
1973 1985 1993 20050
50
100
150
200
250
300
Housing stock Houses per every 1.000 inhabitants
Social Housing A f f ord ab il it y Ind ex
5,435,73 5,80
4,93 4,844,50
3,98
3,48 3,473,17
3,393,18
-
1
2
3
4
5
6
7
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: DANE Calculations: DDUPA - DNP It is clear that one of the main goals in the future for the National and Local governments has to be the improvement in the provision of worthy housing for those living today in informal houses and to stop the growth of the housing deficit. Colombia has experimented with two main ways for the provision of housing; from 1940 to 1990 the national government provided directly the housing solutions through the Territorial
4
Credit Institute3 (ICT), and from 1990 until today the government is dedicated to provide demand subsidies to the households and regulates the social housing market. However, as is evident from the impressive urban housing deficit and the number of urban slums, that these policies have been, at least, insufficient to serve the increasing urban demand for housing. This lack of responses from the government in the provision of social housing solutions has lot of factors interacting: the low income of the population, poor access to formal credit markets, scarcity of served land, not enough flexibility in the housing solutions, and poor targeting in the allocation of public resources. Every one of these factors is extremely complex and requires a specific approach to study it and offer solutions to it. The objective of the present document is to study the scarcity of served land in the main urban areas of the country, and propose a national strategy to overcome this problem.
Graph 3 Regional Distribution of Urban Slums
Region Households
in Slums (Thousands)
% of total urban
households
The lack of adequate land for housing gets even more critical given the provisions that the cities decided to reserve for this objective in their Land Ordering Plans4 (LOP). According to the information provided by 5 of the biggest cities in the country, the afforded land for housing in their LOP would be exhausted between 11 years (in the most favorable scenario) and 3.8 years (in the most critical case). Given this scenarios it turns out obvious that the supply of served land for housing has become a serious restriction to provide worthy housing to the low income households in the country. 3 Instituto de Crédito Territorial. 4 The Land Ordering Plans (Planes de Ordenamiento Territorial) constitute a long term land planning instrument that cities need to adopt for a period of 12 years (3 Mayor periods), according to the Land Ordering Law (law 388 of 1997). In the LOP the cities need to afford the land for future developments, covering the 12 year period.
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Table 1 Urban Land Provision in Selected Cities
Hectares
Actual Housing Urban Area
Urban Expansion Land for Housing Housing Capacity
Bogotá 20,409 2,058 205,800Cali n.a. 1,600 160,000Medellín 7,640 519 51,900Bucaramanga 1,914 107 10,700Barranquilla 2,318 947 94,700Source: Direct request to the cities. Alcaldía Mayor de Bogotá (2003) Due to the lack of information on the relationship between the advances of the informality and the served land market, the Colombian government decided to undertake a study of these dynamics and to formulate a national strategy to improve the efficiency on the provision of land and low-income housing. This project was financed by a Cities Alliance’s grant and had the support of the Worldbank, the National Department of Planning and the Ministry of Environment, Housing and Territorial Development. The project was divided in two stages; the first one produced a diagnosis on the land and low-income housing markets, and the second stage was the formulation of specific strategies on the most important findings affecting these markets, resulting from the diagnosis studies. The rest of the document is structured as follows; the following section will review the most important findings of the diagnosis studies, the third section will present the most relevant recommendations of the specific strategy studies, and we conclude with the policy adoptions as a result of the project.
II. Land and Low-Income Housing Markets Diagnosis The Colombian reality in the land and low-income housing markets in very heterogeneous, for this reason the approach undertook by the project was to analyze these markets using case studies. The four case studies selected were:
• Bogotá, Mosquera y Soacha • Valle de Aburrá • Bucaramanga’s Metropolitan Area • Cartagena
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Graph 4 U rban Pop ulat ion
Po pulat io n C ensuses 19 51- 19 6 4 - 19 73 - 19 8 5- 19 9 3 -2 0 0 5
0
1.000.000
2.000.000
3.000.000
4.000.000
5.000.000
6.000.000
7.000.000
8.000.000
1951 1964 1973 1985 1993 2005
Bogot á Medel l ín Bucar amanga Car tagena
Source: DANE Every case study was required to analyze four different aspects of these markets: i) the dynamics of land occupation during the period 1950-2000, ii) the costs differences between formal and informal housing developments and iii) the institutional capacity of the cities for land management and for enforcing the urban control.
1. Land Occupation Dynamics: 1950-2000 Reviewing the population and urban area growth rates of our four case studies, we can observe a common feature in all of them and this is the consistent deficit in the response of the urban growth to match the population growth. We can see in Graph 5, how in all four cities in every decade (with the exception of Bucaramanga in the 1970s and Medellín in the 1980s) the population growth always outpaced the urban growth. Although in all four cities it is clear the existence of a poor response to the population growth, there are cities where this situation is more critical than in others. While in Bogotá, Bucaramanga and Medellín the urban growth should have been near as three times faster than it was in order to match the population growth, in Cartagena the urban growth would have to be seven times faster than it was. Given these results we can expect the informality to have an important role as a source of urban development in all four cities, but having a bigger contribution in Cartagena.
Graph 5 Bogot á
P opul a t ion and Te r r i t or ia l Gr owt h19 5 0- 20 0 0
0
20
40
60
80
100
120
140
160
180
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000
%
Bogot á P obl aci ón Bogot á Á r ea
M edel l í nP upula t i on a nd Ter r i t or i a l Gr owt h
195 0 - 2 00 0
0%
20%
40%
60%
80%
100%
120%
140%
1950-1960 1960-1970 1970-1980 1980-1985 1985-2000
P obl aci on Ar ea
7
B uc a r a mangaP opul a t ion and Te r r i t or ia l Gr owt h
19 5 0- 20 0 0
0%
20%
40%
60%
80%
100%
120%
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000
Pobl aci ón A r ea
C a r t age naP opula t i on a nd Te r r i t or i a l Gr owt h
19 50 - 2 0 00
0%10%20%30%40%50%60%70%80%90%
100%
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000
Población Area
Source: CEDE (2006) and DPU (2006) As we mentioned before, from the tendencies in these cities we can predict that informal building must have had an important role as a source of housing provision, especially for low-income households. During the period 1950-1990 the contribution of informal housing in Bogotá, Medellín and Bucaramanga was always lower (and in some cases significantly lower) than the formal housing, as a source of urban growth. However, in the last decade of the twentieth century in all three cities the informal housing has nearly match (or overcome as in Bogotá) the formal housing. Even though this phenomenon probably has many explanations, it calls your attention, at least, the coincidence between the change in the national housing policy and the tendency change in the participation of informal housing in the urban growth. Cartagena’s situation is evidently different from that of the other three cities. During the last half of the decade it is the informal provision of housing which has contributed with most of the new urban areas in the city.
Graph 6 Bogot á
U r ba n Gr owt h by Ty pe of De v e l opment19 50 - 20 0 0
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000
T otal For mal Inf or mal
M e de l l ínUr ban Gr owt h by Ty pe of D e ve lopme nt
19 5 0- 20 00
0
500
1,000
1,500
2,000
2,500
3,000
1950-1960 1960-1970 1970-1980 1980-1985 1985-2000
T otal For mal Inf or mal
8
B uca r a ma ngaU r ban Gr owt h by Ty pe of D ev e lopme nt
195 0 - 2 00 0
0
50
100
150
200
250
300
350
400
450
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000
T otal For mal Inf or mal
C ar t a ge naUr ban Gr owt h by Ty pe of D e ve lopme nt
19 5 0- 20 00
0
200
400
600
800
1, 000
1, 200
1, 400
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000
T otal For mal Inf or mal
Source: CEDE (2006) and DPU (2006) If we observe the evolution of the informal urban growth of these cities and we consider the geographic characteristics of each of the cities, we then can obtain one of the reasons behind the differences in the participation of informal housing between Cartagena and Bogotá, Medellín and Bucaramanga. In the latter three cities most of the informal developments had to locate in the periphery of the urban perimeter, areas characterized by high slopes and difficult access5. On the other hand, in Cartagena the informal housing occupied almost all the territory, including traditional neighborhoods as Bocagrande. However, low income households usually had to locate in areas characterized by geographical hazards, especially land slides and floods. The main difference with the situation of the other three cities is that the occupation of these lands was easier. For instance the areas near the sea and the Ciénaga were easily occupied, since it only required to be filled with wastes and building refuses.
Blueprint 1 Spread of Informal Settlements
Bogotá-Soacha-Mosquera Medellín
5 In the annex we show pictures of typical informal settlements in the four cities, where it can be observed the differences in the geographic configuration of the cities.
9
Bucaramanga
Cartagena
Source: CEDE (2006) and DPU (2006) In Cartagena, this can be easily analyzed graphically comparing the origin of the area with the areas classified as hazardous. The results, shown in the blueprint 2, clearly show the close relationship between informality and hazardous areas. However, the existing hazards are not really a major obstacle for the location of informal settlements. As we mentioned the available land can be easily increased by the occupation of the water bodies surrounding the city.
Blueprint 2 Informal settlements and hazardous areas: Cartagena
Source: CEDE (2006) After reviewing the experience of these urban centers we can see that individually they have not been able to provide the enough served land to respond to the demographic pressures. However, if we look at the Valle de Aburrá, the most important metropolitan phenomenon in the country, we are going to see a different story. The case of Valle de Aburrá is very peculiar because in the 1950s this area had a population density very similar to a highly urbanized territory (225 inhabitants per hectare), this population density is clearly higher than any of the other densities in the 1950s, for instance
10
Bogotá’s density was 100 inhabitants per hectare. This high density might be one of the reasons behind the evolution of the land occupation in the Valle de Aburrá during the last half of the second decade. In our period of study the territory grew at a faster pace than the population growth in the Valle de Aburrá as a whole. If we consider that this calculation includes Medellín, which as we have seen has accumulated a territorial deficit in the same period, it turns out even clearer how in the other municipalities that form the Valle de Aburrá the difference in growth rates shows a even more dynamic response from the territorial growth. It can be plausible that the high urban densities obliged to the municipalities of the Valle de Aburrá to respond more efficiently to the population growth in order to avoid increases in the urban concentration.
Graph 7 V al l e de Abur r á
Popul a t i on and T er r i t or i al Gr owt h1950- 2000
0, 00%
20, 00%
40, 00%
60, 00%
80, 00%
100, 00%
120, 00%
140, 00%
160, 00%
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000
P obl aci ón Ar ea
Source: DPU (2006) Considering that most of the population growth in the Valle de Aburrá is generated by Medellín, it is perfectly logic to say that if it was not for the contribution of the other Valle de Aburrá’s municipalities the territorial deficit in Medellín would be even higher. This case serves as a good example on how the big cities need its neighbor’s collaboration in order to provide enough land to serve the excess of housing demand that exists in these big cities. This is probably one of the most important lessons extracted from the analysis on the land occupation dynamics in these four cases. Unfortunately, the figures that promote the metropolitan or regional cooperation in the country are very underdeveloped. Just as the Valle de Aburrá shows an important response to the land demand generated by Medellín, the case of Bogotá and Mosquera6 the represents a very different scenario. In this case Mosquera has blocked almost every initiative to the provision of urban land to locate low-income settlements in its perimeter, one of the reasons that might explain the huge low-income (formal and informal) settlements existing in Soacha7 8. In the country the scenario of Bogotá, Mosquera and Soacha is the norm and the case of the Valle de Aburrá is the exception. It results obvious that facing the running out of served land in the big cities, it is necessary to find metropolitan and regional mechanisms of cooperation to overcome the low-income housing deficit.
6 This example can be related with most of the municipalities surrounding Bogotá, were only Soacha and Funza have been providing land to locate low-income housing. 7 Soacha is formed only by socioeconomic strata 1, 2 and 3. 8 We need to remember that Mosquera and Soacha are neighbors.
11
Blueprint 3
Urban Expansion and EPM Aqueduct Coverage 1950-2005: Valle de Aburrá
Source: DPU (2006)
The ability of the Valle de Aburrá to respond to the population growth might have as one of its explanations, the efficiency of the public utilities provider in the area, Empresas Públicas de Medellín (EPM)9. EPM was founded in 1955 and in blueprint 3 we can observe the coverage evolution of the services provided by it on the Valle de Aburrá. We can observe that by the end of the 1970s the area cover by EPM was close to the 100% of the Valle de Aburrá’s urban areas, facilitating the location of urban settlements in this area and the fast expansion of its territory10. The efificiency in the provision of public utilities, in this case water and sanitation, could be also explaining the strong change in the participation of informal settlements in Soacha between the 1980s and the 1990s. The Empresa de Acueducto y Alcantarillado de Bogotá11 (EAAB) has been the provider in Soacha since 1971, however it was only until the late 80s when the enterprise started to improve the coverage of the service in the municipality.
9 Public Enterprises of Medellín. 10 EPM was not the only utilities provider in the Area, for this reason the existence of additional providers facilitated even more the increase of served land. 11 Water and Sewerage Enterprise of Bogotá
12
Graph 8 Ur ban Set t l ement s by T ype of Deve l opment : Soacha
0
20
40
60
80
100
120
140
160
180
200
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000
T otal For mal I nf or mal
Source: DPU (2006) The situation in the Valle de Aburrá and Soacha lead us to our second conclusion: the need to coordinate the provision of public utilities (especially water and sanitation) and the land availability to receive low-income housing. These two policies have to go hand in hand since the water and sanitation services are the most important condition to make land available to locate formal housing.
2. Associated Cost: Formality versus Informality One of the existing premises about the differences between the formal and informal developments is that the latter have a great demand because they imply lower costs than the former. Nonetheless, the hypothesis that we developed here argues that comparisons between these two types of development should not be restricted to the cost structures but should include the welfare impacts that these types of developments have on the population living there. Conscious that the elaboration of statistically representative evaluations were beyond the reach of the project, the methodology used in this study included the collection of primary information through surveys, focus groups and personal interviews in 10 settlements (formal and informal) in each area12 of study. To complement this information, in some cases it is used statistically representative information based on the Quality of Life Survey13 and the SISBEN14 survey.
2.1. Housing Cost Structures: Some Evidence We begin this section by making a comparison of the differences in the costs structures by type of project in each of the cities. Initially we show in table 2 the comparisons among our four case studies. The most significant finding provided by this comparison,
12 The distribution between formal and informal is different in each city. In Bogotá, Soacha and Mosquera were selected six formal settlements and four informal. In Medellín were chosen five formal and five informal settlements (a complete list of the settlements can be found in the annex). 13 Encuesta de Calidad de Vida (ECV). 14 The SISBEN survey is used to classify the population beneficiary of public social services, so it covers the entire universe of low income population in the cities.
13
is to observe that Cartagena shows the lower cost of the land. If we remember in the previous section we mentioned, how in Cartagena was relatively easy for informal settlements to expand the availability of land, filling the water bodies in the city. This fact can be explaining in part why Cartagena has the lower land values. Given that the supply of land for low-income households can be quickly increased, this will depressed the prices of the land for formal low-income housing.
Table 2 Estimated Cost of a Formal Social Housing Solution
Bogotá Medellín Bucaramanga Cartagena
Land Values 15.4% 9.1% 14.0% 7.9%
Urbanism 10.1% 10.4% 9.3% 22.5%Aqueduct and sewerage 2.0% 0.0% 5.5% 8.3%Power 1.7% 0.0% 1.8% 4.0%Roads and sidewalks 4.5% 0.0% 1.9% 10.1%Other 1.9% 0.0% 0.0% 0.0%
Construction 47.1% 70.9% 52.8% 50.0%Direct 47.1% 62.2% 52.8% 50.0%Indirect 0.0% 8.6% 0.0% 0.0%
Administration and sales 22.9% 7.3% 23.9% 19.7%
Profit 4.5% 2.4% 0.0% 0.0%
Total 100.0% 100.0% 100.0% 100.0%
Source: DPU (2006) and CEDE (2006) In Bogotá we observe the highest land values among the four cases, but also the lowest construction costs. Given the growth population rates, this land values seems to respond to the demand law, higher demand (Bogotá) implies higher prices. This high land values seem to be compensated by formal builders of low-income housing by developing construction techniques to lower the final cost of the product, just as we saw in graph 2. Additionally, since projects in Bogotá are larger than in any of the other cities, builders can take advantage of the economies of scale in low-income housing projects. Formal builders need to compensate this higher land prices given that the National Government regulates the prices of the low-income housing. In table 3 we can see the four different categories designed to serve the needs of low-income households. Since the allocation of national subsidies are mostly targeted to types 1 and 2, formal builders need to adjusts their costs in order to meet the values required to the provision of low-income housing.
Table 3 Types of Social Housing
Minimum wages Pesos Dollars
Type 1 50 21,685,000 9,638Type 2 70 30,359,000 13,493Type 3 100 43,370,000 19,276Type 4 135 58,549,500 26,022Source: Decree 975 of 2004. Ministry of Environment, Housing andTerritorial Development
Now we turn our attention to the costs structures of informal settlements. Reading table 4, we find that contrary to what we would expect Cartagena has the higher land value, among these three cities15. This result is clearly opposite to our previous argument where we justified the low formal land values in Cartagena due to the possibility to easily produce informal land. However, there is one characteristic driving the 15 Bogotá is not included due to lack of information.
14
calculation in table 4. One of the informal settlements visited during the consultancy was close to an expansion area reserved for tourism developments. Some of the households interviewed expressed that even though they had pay a high cost for the land, they were expecting to get higher prices once the expansion of the tourism activities will reach these areas, however this case is exceptional. Table 4 shows a reality opposing to the common perception: informal settlements have to pay for their land. This situation is true even in those settlements originated as an invasion. We can also see that even though the land in informal settlements is cheaper than in the formal ones, the differences are not as big as you might expect. Thus, since the final housing solutions in informal settlements have lower prices than those of formal origin, most of the differences are due to the differences in the cost of urbanism and the indirect costs; which are almost negligible in the informal settlements. The direct costs are in some cases similar to those that exist in the formal settlements. However, given that most of the informal homes are built through progressive development and the households buy in very small quantities their construction materials, they pay much higher costs per item than in the private formal developments. The comparison of the direct costs, thus hints toward differences in the quality of the products16.
Table 4 Estimated Cost of an Informal Social Housing Solution
Medellín Cartagena BucaramangaDollars % Dollars % Dollars %
General 811 19.9% 847 14.7% 646 10.2%Land value 811 19.9% 847 14.7% 646 10.2%Urbanism 447 11.0% N/A N/AAqueduct 55 1.3% N/A N/ASewerage 65 1.6% N/A N/APower 251 6.1% N/A N/ARoads and sidewalks 0 0.0% N/A N/APublic space 0 0.0% N/A N/AInfrastructure 0 0.0% N/A N/AProtection and location 0 0.0% N/A N/ADirect costs 2,804 68.7% 4,925 85.3% 5,697 89.8%Materials and transport 1,883 46.1% 3,383 58.6% 4,224 66.6%Labor costs 840 20.6% 895 15.5% 1,077 17.0%Others 8 0.2% 646 11.2% 396 6.2%Indirect costs 20 0.5% N/A N/ATaxes 0 0.0% N/A N/ALicence 0 0.0% N/A N/AAdministration 0 0.0% N/A N/AHonararies 0 0.0% N/A N/ALegalization 20 0.5% N/A N/AAdvertisment 0 0.0% N/A N/ATotal costs 4,081 100.0% 5,772 100.0% 6,344 100.0%
Source: DPU (2006) and CEDE (2006)
2.2. Welfare Comparisons We finished the previous section arguing the close relationship between income levels and the type of development chosen by the population, but we did not show statistics on income levels to support our argument. We begin this section with the objective of making a comparison on the welfare levels that the populations living in formal settlement against that of the population living in informal settlements. The first element used to our analysis in the income level, and we take the cases of Bogotá, Bucaramanga and Cartagena17. Our conclusion in the previous section stated that in these cities we found a clear link between the income level and informality. The analysis in this section is done in two dimensions, the first within cities and the second between cities. If we
16 We consider very important to make evident that the sources of the information oblige to take these results very carefully. In Medellín the source of the information were interviews with some households in the informal settlements, and sometimes the revision on some accounting records that these households kept. In Cartagena and Bucaramanga, the sources used were interviews in the informal settlements and interviews with formal builders. 17 In Bogotá the information in based on the surveys made in the 10 settlements, and the information of Bucaramanga and Cartagena is based on the SISBEN survey.
15
look at the differences in the average income level within cities, the average monthly income per- capita of the households living in formal settlements is higher in each of the three cities. In Bogotá the difference in the highest, the average monthly income per capita on the households living in formal settlements is 165% higher than in the informal ones18. In Bucaramanga this difference reaches the 47.5% and in Cartagena, where the difference in the lowest, it is of 12.8%. When we make the comparison between cities we can see that Bucaramanga has the highest average income per-capita amongst the informal settlements, being 6.6% higher than in Bogotá and 26% higher than in Cartagena. As we remember from the previous section, Cartagena has the highest participation of informal settlements between these cities, situation that is consistent with the idea that informality and low incomes are highly correlated.
Table 5 Average Monthly Income: Bogota
(Pesos)Informal Informal
Consolidated Recent
Average Monthly Income 1,013,000 490,500 767,000 519,000 173,000Average Monthly Income per-capita 253,250 132,967 247,754 123,486 35,698
Source: DPU (2006).* These settlements w ere developed by popular housing organizations** These settlements w ere developed through the modality of land w ith services, w here the household in in charge of theconstruction
Private Cooperative* Mixed**
Average Monthly Income: Bucaramanga
(Pesos)Informal Formal
Averagen Monthly Income 355,287 426,211Averagen Monthly Income per-capita 84,843 125,135
Source: CEDE (2006)
Average Monthly Income: Cartagena(Pesos)
Informal Formal
Averagen Monthly Income 310,357 321,645Averagen Monthly Income per-capita 67,335 75,966
Source: CEDE (2006) The second element in our welfare review is the value that the households paid for its home. The value for each of the three cities analyzed was obtained through the surveys made in the 10 chosen urban settlements. In this case it is important to recognize that the product that formal and informal households acquired is not homogeneous. Formal households typically buy finished houses, with the basic urban infrastructure and with all the basic public services connected, while informal households usually acquire a piece of land with no infrastructure, and no connected public services. Then, the comparison that we can do is basically between cities, and not within. Making this type of analysis we found consistent answers with our previous results on income levels and informality. We can see that the informal solution with the highest value is in Bucaramanga, with a value of 4.6 millions constant pesos of 2005. This value is 55.2% higher than that of Bogotá and 204% higher than in Cartagena. These results replicate the ordering of the average income per-capita. Additionally, when we made the analysis on the occupation of the territory, we mentioned how easy was in Cartagena to obtain a piece of land, given the geographical characteristics of the city. The results of table 6 seems to confirm this proposition. 18 To obtain the average monthly income per-capita of the formal settlements we calculated the average of the private, cooperative and mix settlements. The average for the informal settlements included the consolidated and the recent settlements.
16
Table 6
Value Paid by the Household for the House: Bogota(Constant Pesos of 2005)
Private Cooperative* Mixed Informal InformalConsolidated Recent
Cost of the house or land 19,000,000 9,395,000 8,400,000 3,205,000 2,800,000
* The values of the houses produced by the cooperative sector should be similar to those produced by the private sector(VIP y VIS type 1 and 2), the average gets altered because in the study w as included a relocation case.
Source: DPU (2006) Value Paid by the Household for the House: Bucaramanga
(Constant Pesos of 2005)Built House Land
Cost of the house or land 22,815,136 4,660,862
Source: CEDE (2006)
Value Paid by the Household for the House: Cartagena(Constant Pesos of 2005)
Built House Land
Cost of the house or land 17,823,766 1,531,591
Source: CEDE (2006)
In our previous comparison we could not make an analysis within cities because we were not dealing with homogeneous goods. We try to overcome this problem by asking the households their perception on the value of their homes. We are aware of the existence of an important degree of variability in the houses used to calculate this average, especially within informal settlements. However, although imperfect, this measure can give us important information on the welfare impacts that the different types of developments have on the households. In table 7 we can see how there is a convergence within and between cities to similar values, independent of the settlement’s origin. There are, in our view, two main reasons for this phenomenon: the first one is that the market is quite similar for popular housing; and the second one is that informal houses are more flexible and a source of income for the households living in them, which increases their values. The first explanation is based on the premise that only low-income households will demand low-income housing. So the market is clearly identified, for this reason independently of the origin of the settlement the values will tend to converge towards and homogeneous value. However, it can be argued that the products resulting from a formal settlement and from an informal one are not really as homogeneous as needed for the first explanation to hold. It is obvious that formal settlements have better urban and social infrastructure, which should be reflected in higher values than those with informal origin. Then there must be something else explaining this value convergence, and this is where our second argument becomes useful. Informal settlements traditionally produce more flexible houses, and the households can expand their homes to a larger extent than those of formal origin. This feature facilitates that the house becomes an income source for the household which can either establish a small business and/or rent spaces in the house to third parties. This characteristic increases the perceived value of their homes in the population living in settlements of informal origin, approaching their value to those of formal origin. A final point needs to be stressed here, and this is that some informal settlements lack property tittles, which makes the estimated value a very hypothetical assumption since there is no market for those homes.
17
Table 7 Estimated Value of the House given by the Household: Bogota
(Constant Pesos of 2005)Private Cooperative Mixed Informal Informal
Consolidated Recent
Estimated value 24,930,000 20,650,000 40,800,000 32,875,000 8,400,000
Source: DPU (2006) Estimated Value of the House given by the Household:Bucarmanga
(Constant Pesos of 2005)Built Land Invasion
Estimated value 28,583,000 23,615,000 20,666,000
Source: CEDE (2006)
Estimated Value of the House given by the Household:Cartagena(Constant Pesos of 2005)
Built Land Invasion
Estimated value 23,272,000 20,500,000 23,444,000
Source: CEDE (2006)
Here we decide to make a partial assessment of the impacts on the welfare level of the households, given the type of settlement where they live. The reason to select this point to do this assessment is because the difference in the methodologies under which the consultants prepared the diagnosis studies, does not allow us to keep doing comparative analysis between more than two cities. So far we have analyzed three elements influencing the welfare of the households, the income level, the cost and type of the housing solution and the estimated value of their homes. If we take a typical comparative static appraisal we can say that both the income level and the type of the homes show evidence of a higher welfare level on those households living in settlements with formal origin, than the households living in informal settlements19. The third element analyzed so far, on the contrary, seems to favor the informal settlements over the formal ones. The reason is that the acquisition cost, as we saw, is lower in the case of settlements with informal origin; thus if the estimated value of both formal and informal houses tend to converge, this implies a higher profit for the informal households. However, in this last case will be wrong not to consider other factors playing an important role in the comparison, especially the difference in time to obtain a similar product between formal and informal settlements. We mentioned that in most of the cases the informal households buy a piece of land, without any infrastructure, services, and even any construction. On the contrary formal households have all these characteristics immediately. So it is quite evident that while informal households reach similar urban characteristics than those existing in the formal developments, their welfare levels must be lower. We are going to try to find evidence on this intuition in the remaining of the section, using city-specific evidence. We begin the second stage of this analysis using the case of Bogotá. One of the most common arguments used to highlight some advantages of the informal settlements, is that these houses can be expanded and in such a way they can become a source of income for the household. We even mentioned that before, as a justification to the similarity in the estimated values that households give to their homes both formal and informal settlements. However, so far this is a general argument with no evidence. The case study in Bogotá obtains information on these characteristics of the houses, which can help us to confirm or reject the perception on the difference between formal and informal settlements. It is clear from table 8 that the general perception about the differences in land areas and the possibility to expand the houses between formal and 19 We believe that is necessary to emphasize that we are not attaching causality to these relationships.
18
informal settlements is right. We can see that while most of the homes in informal settlements have the possibility to get expanded, the majority of the formal households do not have that feature. We can also observe that the houses in informal settlements have bigger areas and a higher number of floors. This is in line with the idea that households in informal settlements usually have productive areas within the houses, characteristics that formal houses lack, and which is one of the most common critics to the formal housing as a source of low-income households.
Table 8
Private Cooperative** InformalAverage area of the land 46.09 m2 35.50 m2 90.00 m2Average occupation land index of the development 0.43 0.63 0.67*Average density per hectare of the development 224 171 81.40*Average area of the house 49.73 m2 20.38 m2 (1floor) 165.00 m2
39.44 m2 (2 floors)
Private Cooperative InformalIs it possible to expan the HouseMost of them (>50%) 30% 100% 100%Some (>25%, <50%)Few (<25%) 10%None 60%
Private Cooperative InformalAverage Number of Levels of the Houses 1.75 2, 33 2One 50%Two 25% 66% 25%Three or more 25% 33% 75%
Source: DPU (2006)
Areas, Occupation Index and Density
Characteristics of the Houses
Characterisitcs of the Houses
Despite the advantages in relation with the areas of the informal settlements, this analysis does not consider the quality of the homes. For this reason we also look at the building materials in the different developments. Reviewing this, we observe that near half of the homes in the informal settlements have inadequate building materials (light materials and traditional rubblework). The other half of the informal settlements has adequate materials. This can be showing the differences in time among these settlements. It is very likely that those with adequate materials are the consolidated informal settlements, while those with light materials and traditional rubblework are the recent ones. We can see in graph 9 that among the non-traditional settlements20 the most frequent reason of dislike is the progressive development, which provides evidence in favor of the negative impact that this characteristic has on welfare.
Table 9
Technological Characteristics of the HousesPrivate Cooperative Informal
Light Materials 25%Traditional Rubblework 21%Supported Rubblework 72% 72% 8%Traditional Structure 46%Industrialized System 28% 28%Source: DPU (2006)
20 We included the mixed developments because despite of its formal typology the way of construction is not in the usual way, they are developed progressively.
19
Graph 9
BogotáReasons of House Dislike
17
50
17 17
57
17 18,5 18,5 17
33
1713
25
38
13 13 13 13 13
0
10
20
30
40
50
60
Nothi ng Constr uctionqual i ty
Constr uctiondetai l s
Pr ogr essivedevelopment
Locati on Publ ic ser vices Sustaining costs Insecur i ty
Mixed Inf ormal consol idated Informal recent
Source: DPU (2006) Finally, for the case of Bogotá, the consultant in its survey made a direct question, asking the households if they are satisfy with their homes. This question allows us to make a final comparison on the welfare levels among the different types of settlements. In this case we can observe a tendency to converge in four out of the five types of settlements analyzed. In the formal, cooperative, mixed and informal consolidated settlements there is a clear majority of their inhabitants that are satisfied with their current homes. On the other hand, those living in recent informal settlements show clear signs of inconformity with their housing solution. Our assessment on this situation is very much consistent with the arguments previously laid. Once a house is finished formal and informal settlements enjoy similar levels of welfare from their homes, however informal settings take longer to achieve a product comparable with that of formal ones, while this happens the welfare enjoyed by the population living in the informal settlements is lower.
Graph 10 Bogot a
S a t isf a c t ion of t he H ouse hol d wi t h t he House
69,67
100
83 81,5
38
22,3317 18,5
62
8
0
20
40
60
80
100
120
Pr ivate Cooper ative Mi xed Inf or malconsol i dated
Inf or mal r ecent
Yes
No
NA
Source: DPU (2006) We will continue our analysis with information from the case studies of Bucaramanga and Cartagena. We begin by looking at one of the most common indicators of scarcity the Unsatisfied Basic Needs (NBI). The situation in these two cities is in some degree
20
contrasting. While in Bucaramanga we can observe an important difference in both indicators, where formal settlements have better indicators; in Cartagena both indicators behave quite similar. If we remember, average incomes in Cartagena were lower than in Bucaramanga and that informality is more spread in the former; even some traditional neighborhoods have informal origin. So given these indicators, while in Bucaramanga the welfare obtained from living in formal settlements seems significantly higher than in informal settlements, in Cartagena is very difficult to make any assessment. Our reading of this situation is that in Cartagena poverty is so spread in the city that socioeconomic conditions among the low-income households are very similar, which will tend to homogenize the socioeconomic conditions among these households. According to this, while quality housing plays an important role in the living conditions of the households in Bucaramanga; in Cartagena the actions have to be more focused on income generation for the households. This does not mean that in Bucaramanga there is no need to improve the income of the low-income households. Our point is that improvements in the provision of formal housing will not have significant impacts on the welfare of the population in Cartagena, unless efforts are made to increase their income. In contrast, in Bucaramanga it can be big gains in the welfare of the population living in informal settlements by improving their housing conditions.
Table 10 Bucaramanga: Households with
Unsatisfied Basic Needs
Origin NBI 1 NBI 2Informal settlement 61.20% 23.52%Formal settlement 46.70% 11.40%Source: CEDE (2006)NBI 1: Households under povertyNBI 2: Households under misery
Cartagena: Households with Unsatisfied Basic Needs
Origin NBI 1 NBI 2Informal settlement 72.72% 36.34%Formal settlement 71.88% 43.48%Source: CEDE (2006)NBI 1: Households under povertyNBI 2: Households under misery
We mentioned before that while formal housing have access to public services once they start living in the houses; informal houses only have access to those services after some years on occupying their homes. Graph 11 allows us to compare the difference in time to obtain the services, and the time to get the first bill21. As expected, in Cartagena, we can see that the formal settlements have a faster access to all the public services. While in Bucaramanga, it comes as a surprise that those who get first the access to the public services are those who acquired only a piece of land. What it is common to both cities is that those settlements initiated as an invasion are those who get later the access to the services. While this situation might come as a disadvantage to the population living in this type of settlements, we can see that the power, water and sanitation bills have a lag in time compared to the moment the population access the services, which does not occur neither in the formal nor the piece of land developments. The average lag in Bucaramanga is close to five years, while in Cartagena is no more that year and a half. The existence of this lag in the case of the invasions will imply a higher welfare to these settlements in comparison with the other two types, since the can enjoy the access to the public utilities for quite a long time without having to pay for the service22. Even though these results show faster access of public utilities to formal settlements, it is unsettling to observe that formal settlements do not have immediate access to the basic utilities (especially power, water and sewerage). This might occur because in
21 This information was collected through a survey applied during the focus groups made in the 10 formal and informal settlements in each city. 22 Unfortunately we cannot asses the quality of the provision of the service, which will guarantee a better appraisal of the impacts on the welfare of the population. However, in the case of the water is quite common that the first access the population in informal settlements have is through a communal fountain, the direct connection to the house takes few more years.
21
some formal projects the developer does not meet the requirements of urban infrastructure and even in the housing solutions, and the government does not have efficient tools to force the private entities to meet these conditions. This situation requires the intervention of the local governments to provide the urban infrastructure missing in these projects, which delays the access of the population to it.
Graph 11 Bucaramanga
Formal Housing
Land Invasion
Cartagena Formal Housing
Land Invasion
On the other hand, informal settlements do not spend any resources in urbanism, most of these investments have to be undertaken by the local government during the upgrading projects performed on informal settlements. Given that for the city23 is more costly to provide public utilities to areas that are already occupied, than to clean lands; we can see the infrastructure upgrading costs as extra-costs imposed by the informal settlements on the society as a whole, if we consider that the upgrading projects are financed with public resources. In this line if the cities were capable to supply enough land to provide formal settlements to all households, these resources will be saved. However, an apposite argument sees the resources spent in upgrading as a delayed investment from the local governments in the provision of worthy housing for low income households. In this view, if the cities are capable to satisfy the land demand for low income housing the resources spent in upgrading will not be really saved, but will be spent in other ways (e.g. subsidies) to provide low-income housing. The biggest gains in this view will be in welfare, since all households would access a worthy housing solution right from the beginning.
23 We use the estimated values for Bogotá, since this is the only city that have calculated these costs.
22
Table 11
Comparison Infrastructure Costs: Bogotá
Formal InformalPesos Dollars Pesos Dollars
Infrastructure aqueduct and sewerage 446,036 192 3,064,316 1,320
Roads and sidewalks 989,958 427 4,741,617 2,043
Total Costs 1,435,994 619 7,805,933 3,364Source: DPU (2006)
Relocation and Upgrading Costs: Bogotá
Pesos DollarsInfrastructure aqueduct and sewerage 3,187,496 1,373Hazard mitigation 887,990 383Roads and sidewalks 4,932,221 2,125Emergency attention 1,730,948 746
Total cost upgrading 10,738,655 4,627
Titling 814,534 351Relocation 14,871,930 6,408
Total cost upgrading and relocation 26,425,120 11,386
Source: DPU (2006)
2.3. Group Perception of its Housing Conditions Our final review of the housing conditions between formal and informal settlements asks directly to these populations their perception of their housing conditions. This evaluation has some characteristics that can be associated with the welfare perceived by these groups, thus we tried to associate them with the welfare evaluation. What we are going to present below are the most important results from the focus groups in Bucaramanga and Cartagena, where the CEDE (2006) analyzed these discussions using a group dynamics methodology. Three topics guided these discussions: i) origin and development of the settlement, ii) changes in the living conditions and iii) likes and dislikes of the settlement. Amongst informal households we can find some common characteristics in both cities. The origin of the informal settlements is commonly the result of the non-existent supply of affordable formal housing for the poorer households and the perception of higher welfare attached to the ownership of a housing solution24. In most of these settlements the houses and the urban infrastructure are built by the community, generating formation of strong community ties. Thus, when we observe the preferred features of the informal settlements, we can see that these are associated to the social cohesion existing within their neighborhoods. This last characteristic is usually forgotten at the moment of make the assessment on the welfare conditions between formal and informal households. Amongst the factors of dislike the most commonly mentioned were the impossibility to legalize the settlements, the insalubrity conditions (mainly by the absence of sewerage) and the poor terrain conditions (which make impossible to legalize these settlements and provide sewerage). Looking at formal households, we can find some differences between the households in Bucaramanga and Cartagena. In Bucaramanga the importance of the ownership is not among the reasons given by the households to select formal developments, while in Cartagena this is an important reason. In Bucaramanga households located in formal settlements have the expectation of future increases of value due to the improvements in the urban infrastructure, so formal household attach some exchange value to their properties, characteristic that is not present in informal settlements. Additionally these populations consider that the urban infrastructure must be provided by the local government and the community gathers to exert political pressure to obtain it. 24 Of course the concept of ownership here is also informal and is related to the condition of occupation of the house or the terrain and not to the legal ownership.
23
The results from the focus groups are consistent with the conclusions we made from the Unsatisfied Basic Needs index. We observe in Bucaramanga important differences between the motivations to choose the selected type of development and in the likes and dislikes mentioned by the households. Probably the most important difference found in Bucaramanga is that formal households did not consider informality as an option, showing important differences in economic conditions between these two groups. In Cartagena, on the contrary, for some of the households living in the formal settlements, informality was contemplated; this situation shows how similar formal and informal households are in this city. If we wanted to make an evaluation on the welfare levels of the formal and informal households based on the provided information, it would not be wrong to conclude that households living in settlements developed informally perceived a lower welfare level than the households living in formal settlements. In table 12 we make a qualitative assessment based on the results presented in this section. Looking at this appraisal we confirm our welfare evaluation.
Table 12 Welfare condition Formal Informal
Income per-capita + -Value paid for the housing solution = =Estimated value of the house - +Initial living conditions of the housing solution + -Financial effort of the household + -Final living conditions - +Satisfaction with the housing solution + +/-Unsatisfied basic needs + -Time of access to the public services + -Time to star paying for the public service - ++: The w elfare condition is more favorable for this type of settlement-: The w elfare condition is less favorable for this type settlementNote: For the specif ic case of the satisfaction w ith the housing solution the sign (+/-) means that in the consolidated informal settlements the impact on w elfare is favorablew hile in the recent informal settlement the impact is less favorable.
3. Institutional Strength: The Case of the Urban Control Our analyses so far have shown the supply and demand characteristics of the land and low-income housing markets. The land occupation dynamics showed the evolution of the formal and informal land supply. Then the socioeconomic indicators, the focus group discussions and the associated costs of formal and informal settlements made a good characterization of the low-income housing demand. Putting together these two pieces of information it turns out evident that so far the low-income land and housing policies have failed in reaching its objectives. The result of this policy failure has been, on one hand, great inefficiencies in the land supply, reflected in the occupation of terrains inadequate for human settlements and in the significant contribution of the informal settlements to the urban growth. And, on the other hand, on the demand side exist important differences in the living conditions between the households living in formal and informal settlements, creating important inequalities and generating poverty traps. This reality makes evident the need for a deeper public participation to improve the operation of the markets, but also to ensure the spread of the benefits to the poorer households. In this sense, the one of the areas where the state has been focusing its intervention is regulating these markets. Thus, in order to see if this intervention has
24
been effective we will analyze the case of the urban control in our four case studies. The urban control is not only related with to the control of the informality, its field of action includes the mechanisms that guide the formality on the territory. We begin by looking at the urban control of the formal settlements. With the expedition of the law 388 of 1997 –land ordering law- the way in which the urban planning worked was significantly changed. This law was built on three basic principles: i) the social and ecological function of the land ownership, ii) the prevalence of the general interest over the particular, and iii) the egalitarian distribution of burdens and benefits. One of the objectives of the new legislation was to induce a change in the way that urban development occurred. Before the law 388 the most common way to develop the city was the building of single pieces of land. After the law 388, the urban development needs to be planned in large pieces of land, which must provide the necessary urban infrastructure to guarantee to achieve the international urban standards. This law provides several instruments to develop its principles, one of its most important instruments in the “partial plan”. The partial plan has become the single most important instrument of urban planning.
Table 13 Advances in the Formulation and Adoption of Partial Plans: Bogotá
april of 2005Phase Number Hectares % of the total
number% of the total
areaAdopted 18 370.64 39.1% 19.1%In adoption 5 158.18 10.9% 8.1%In project 10 624.32 21.7% 32.1%In delimitation 13 790.70 28.3% 40.7%Total 46 1,943.84 100.0% 100.0%Source: DPU (2006)
Advances in the Formulation and Adoption of Partial Plans: Medellín
2006
Phase Number %Adopted 11 15.9%In consultation 7 10.1%In delimitation 6 8.7%Rejected 8 11.6%Exonarated 1 1.4%In formulation 27 39.1%In final evaluation 5 7.2%In adjustment 4 5.8%Total 69 100.0%Source: DPU (2006)
In table 13 we show the advances in the formulation and adoption of partial plans in Bogotá and Medellín. We can see how since the adoption of the Territorial Ordering Plans25 in these cities26 less than the 20%27 of the initiatives have been approved. This situation can be reflected in the lack of new served land supply in these cities, able to receive the location of formal urban settlements. When we looked at the land occupation dynamics in these cities, we saw how during the last decade for the first time the informal settlements participated almost equally in the case of Medellín, and even with a majoritarian participation, in the case of Bogotá, to the new housing developments. A lack of response from the cities to provide new served areas to formal developments will only acute the pressure for new informal developments to be formed. Additionally if we consider that during the last half of the 1990s decade, the construction sector in
25 The Territorial Ordering Plans (POT) are also a new instrument product of the law 388, and its function is to set the medium term (it has a validity of 12 years) planning guidelines of the territory of the cities. 26 1999 in Medellín and 2000 in Bogotá. 27 In Bogotá we take the percentage in reference with the area adopted.
25
the country was going through its biggest recession, and the low-income housing became the most important source of earnings for the builders, delays in the approval of new areas will affect principally this sector of the housing demand, with the consequence of sending additional households to informality28. The control of the informality, by its nature is more difficult, and in order to be successful should be preventive instead of curative. However, until a few years ago in Bogotá, the control of the informality in Bogotá and Medellín occur by ex-post actions. The two most traditional forms of interventions over the informal settlements, which are common to both cities, are the legalization and the upgrading of informal settlements. The former consists in the inclusion of the informal settlement as a part of the urban perimeter, which allows public investments on the incorporated settlement. The latter consists in public and private interventions that look to provide the urban infrastructure that these settlements lack, due to their informal origin. As we can see both instruments look to alleviate the deficiencies of the urban settlements but not prevent their formation. As mentioned, only until a few years ago, Bogotá started to apply preventing actions to the formation of new informal settlements. These actions had two components, the border pacts and the inter-institutional network for the prevention on informal settlements. The border pacts look to protect the areas where the urban and rural lands have their limit and the environmental protection areas. The idea of these pacts is to involve the community that is on the vicinity of these areas to cooperate with the local agencies to prevent the informal occupation of these lands. The inter-institutional network for the prevention of informal settlements has the objective of “coordinate and verify… the necessary actions to avoid and stop the illegal developments in the Capital District”. However, the continuous institutional reform of the Capital District has avoided the formation of this network. The poor advance in the adoption of the partial plans, and the limited strategies to control informal settlements make evident a weak institutional development for the urban control in these cities. If we take into account that Bogotá and Medellín are the two biggest cities in the country and the cities that usually are taken as an example in the application of public policies, it results concerning the institutional capacity that smaller cities might have to exert an adequate urban control in their territory. Cartagena and Bucaramanga are good examples of this situation; so far neither of these cities has adopted a partial plan29 and the capacity to control the formation of new informal settlement is very limited (especially in Cartagena). Although, we did not mention it before, Bello in the Valle de Aburrá constitutes a critical example of the lack of institutional capacity (not only for urban control). This municipality is mostly formed by low-income settlements, the highest stratum in the city is the stratum 3, which creates a difficult fiscal situation. The city is now under the regime of the law 715 of 2001, which requires the city to make and important fiscal adjustment. As expected one of the principal adjustments has been done on the operation expenses, reducing the public officers in the city. This situation has leaded the city to the inability to exercise an adequate urban control. Additionally, in the city exists a difficult situation of public order, the influence of the outlaw groups is so strong that they are the main informal developers in the city. Then Bello reflects the need to design alternative ways of
28 The cases of Cartagena and Bucaramanga are not shown because in these cities there has been no single partial plan adopted. 29 The partial plans adopted in these cities responded to the need to locate the settlements affected by the winter emergency in both cities.
26
institutional capacity, if we want that weak municipalities can properly control the formation of informal settlements30.
4. Concluding Remarks of the Diagnosis Studies The two diagnosis studies elaborated on the four urban areas chosen have served to identify the areas where emphasis needed to be stressed in the land and hosing for the urban poor national strategy. The analysis of the main findings of the diagnosis studies lead us to select three areas to be developed more profoundly in the national strategy. The chosen areas are: i) Mechanisms of regional cooperation, ii) land management tools and iii) low-income housing portfolio.
Table 14 Diagnosis Studies: Principla Findings and National Strategy Emphasis
Principal Findings National Strategy EmphasisRevision of the land management instruments, bringing back a more active participation from the National GovernmentImprovement of the housing solutions portfolioImprovement of the regional cooperation mechanismsImprovement in the coordination of public utilities and housing policies
Convergence by categories in the formal social housing developments
Improvement of the housing solutions portfolio
Informaly has also important costsImprovement of the housing solutions portfolio, focusing on incentive to the housing supplyRevision of the land management instruments, bringing back a more active participation from the National GovernmentImprovement of the regional cooperation mechanismsRevision of the land management instruments, bringing back a more active participation from the National GovernmentImprovement of the regional cooperation mechanismsImprovement of the housing solutions portfolio, focusing on incentive to the housing supply
The instruments existing in the new land management legislation have not been used
Revision of the land management instruments
Weak formal and informal urban control
Improvement of the regional cooperation mechanismsIn
stitu
tiona
l ca
paci
tyLa
nd O
ccup
atio
n D
ynam
ics
Growing advance of informality, especially during the 90s
Scarcity of expasion areas in the big urban centers
Asso
ciat
ed C
osts Land access for informal
settlements has high costs
Formal settlements provide higher welfare levels
- Mechanisms of regional cooperation: The country lacks efficient regional
cooperation mechanisms. The land management legislation has a strong municipal emphasis, cases like Bogotá-Mosquera or the urban control in Bello make evident how this situation is clearly inconvenient.
- Land management tools: The new territorial ordering legislation has been a big step in involving valuable principles in the land management. However, this legislation implied a big change from the previous way of undertake the urban development. This transition has proven difficult, even in the big cities. Those
30 The national strategy undertook this issue by the study of the mechanisms of metropolitan and regional planning, the result of this study is presented in Villamizar (2007).
27
reasons oblige to review how the new legislation has to be applied considering the institutional capacity of the different municipalities in the country.
- Low-income housing portfolio: We saw that investments from low-income households in housing are much higher than expected. Also formal housing as actually set, do not reach the entire demand. These two conditions make evident the need to make more flexible the supply portfolio of low-income housing.
These three areas were developed in studies by Villamizar (2007), Pinilla (2007) and Agudelo (2007). And some of the recommendations of these studies have already been incorporated as policy measures in the national housing policy.
III. Results: Policy Implications The diagnosis made on the four case studies reveals that the land and low-income housing policies have not been enough to provide worthy housing to the low-income population. As we mentioned the role of national government on the housing sector has had an evolution from being a housing producer to an enabler actor which looks to facilitate the functioning of this sector31. The role of the government in Colombia during the 70’s had three main actors with which the Nation had a direct intervention on housing sector trough of: the Territorial Credit Institute (ICT) focus on low income groups, the Mortgage Central Bank (BCH) created for building and financing the housing and acquisition of housing, and the National Saving Fund (FNA) targeted to civil servants. On this context, the government created a housing financial scheme called UPAC which consisted on granting long term loans for building and buying housing units with the advantage to differ the mortgage along the time and thus avoiding any influence of the inflation on dweller’s income during their first years of payment. One of the most remarkable housing policy outcomes during 25 years of implementation of this housing financial program was the construction of 1.5 million housing units. With the issue of the new Political Constitution and the Law 3 in 1991 the role of the government in the housing market was totally modified. The law 3 of 1991 created the National System of Social Interest Housing with two fundamental instruments: the National Institute of Social Interest Housing and Urban Reform (INURBE) and the Family Housing Subsidy Program (SFV) for the demand side. However, after the 90s decade the social housing policy outcome has not been as successful as it was expected. As we have seen the informal settlements have been rising, the housing deficit is larger every year, the living conditions of the informal settlements creates a poverty trap for these households and there is a lack of institutional capacity to undertake the urban control. This reality has lead to the conclusion that the Nation needs to retake a more active action in the land and housing market in the country wants to achieve its goals in this area: to decrease housing deficit, to provide urban land and housing for low income groups, the formal sector competitiveness facing the informal sector, and to apply cross sectorial policies towards an integral urban upgrading actions among others. On this line, the study “Land and Housing for the Urban Poor” is a key input for the National Government policies, and based on that the Nation has set a national strategy
31 World Bank, Housing, Enabling Markets to Work, a World Bank Policy Paper, 1993.
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in which the State looks for playing a major role and intervention on the housing sector, especially in order to improve the access of low-income households groups to urban land and housing. This national strategy as part of the national urban and housing policies has been included in the National Development Plan “Community State: Development for All, 2006 – 2010” PND currently under discussion at the National Congress. Based on the diagnosis and on the particular strategy studies32, the national strategy developed by the National Government and included in the PND has been set on the followings strategies: urban development: compact and sustainable cities, housing: solutions within reach for all, and transversal integral programs.
Figure 1
First, the urban development: compact and sustainable cities is compounded by three main columns: i) the optimization of management, financial and control instruments established by the Law 388 of Territorial Ordering of 1997, ii) to increase urban density and to promote urban renewal processes including as a key factor the public space, and finally, iii) to improve information systems for territorial development. In order to optimize urban and regional management instruments the strategy has devised a program to strength the regional and local planning systems, which looks for improving the follow up and evaluation tools in order to evaluate goals established by Municipalities in their POT. In addition, the program aims to strength the regional planning instruments having the Nation playing a major role in urban and regional issues trough current mechanisms called Macroprojects, defining incentives for regional integration and articulation of planning instruments, and guarantying a major role of rural areas as strategic component for integral development on the region. Additionally, the National Government in the National Development Plan is interested in the simplification of the procedures to the approval of partial plans and proposes to set mandatory minimum social housing areas in the partial plans33. Second, the housing: solutions within reach for all have among its strategies to avoid new informal settlements (slums) conformation and to improve the conditions of the
32 These studies are also part of the entire project of Land and Housing for the Urban Poor, ant the areas on which these studies were prepared are: i) Mechanisms of Regional Planning, ii) Instrument of Land Policy and iii) National Housing Policy. 33 The minimum requirements are 20% for types 2, 3 and 4 and 15% for type 1 for all the municipalities with population higher than 100.000 inhabitants and in the municipalities located in the areas of influence of the municipalities with population higher than 500.000 inhabitants.
Urban Development: compact and sustainable cities
Housing: solutions within reach for all Water for life Urban Transport and
Mobility
Guidelines for articulating policies (water and housing; mobility and urban development) and integral programs
Sanitation for human settlements: informal settlements integral
upgrading
Urban Macroprojects for
Social Housing VIS and
Infrastructure
Livable Cities Strategy
Urban Renewal and/or Urban
Redevelopment (densification)
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existing ones, and to achieve an increase increment of the housing building index, especially the social interest housing VIS, in order to restrain the informal settlements conformation as well as the housing deficit. Moreover, it is worthy to mention that complementary strategies has been taken into account in order to strength the housing supply with incentives for social interest housing VIS suppliers by promoting access to credit for them. Also to incentive the formal housing developments, the National Governments proposes the reduction of procedures required to develop housing projects, and in this way to reduce the indirect costs associated with the formal projects. Third, the Integral Programs aim to implement cross sectorial policies in an efficient manner. On this way, the Integral Programs represents a key strategy in order to develop cross sectorial approaches formulation and implementation processes especially on provision of urban land and housing for the urban poor. This innovative policy instruments aim to tackle the principles and more complex problems of cities trough articulated actions of sectorial policies such as water, sanitation and housing. The development of this cross sectorial projects promotes conjunct actions among the Nation, regional and local governments. In addition, the Integral Programs have a useful planning instrument called the Water and Sanitation Departments Plans (PDASB) which aim to achieve the Millennium Development Goals (MDG) related to cover ratio on water and sanitation by 2015. The PDASB has an informal settlements upgrading component as part of its cross sectorial projects, due to the fact the provision of water and sanitation on informal urban areas can be part of a broad action including housing and public spaces. The National Government looks trough this Plans not only to improve the provision of water and sanitation services, but to improve development standards, basic infrastructure extension and more integral housing programs. On this way, the Integral Programs complements this cross sectorial approach with a key program in order to improve the lives of “slum” dwellers as part of the Millennium Development Goals MDG, goal 8 target 11. The Program called “Settlements sanitation: informal settlements (slum) upgrading” aim to guide reordered actions of urban space, public and private, in order to improve sanitation conditions of precarious settlements (slums) in the country. It has five main components: i) water supply and sanitation, ii) prevention, risk reduction and non mitigate areas for resettlement, iii) urban regularization and entitlement, iv) housing improvement and construction materials bank, v) public space upgrading, urban facilities and optimization of transport and mobility system. Furthermore, for an appropriate articulation of this cross sectorial policies approach the Integral Programs advices to Regional Governments and Municipalities to identify and develop the “Integral Urban Actions” an urban management instrument which is executed trough programs, projects and Macroprojects under public private partnerships PPP schemes. It is expected that one of those public stakeholders in Macroprojects is the Nation when these urban actions or Macroprojects are national interests. Moreover, the Macroprojects of national interest are another policy instrument for the National Government in order to play a more active role on the housing sector due to this urban management instrument will be mainly used in order to generate land for social interest housing (VIS).
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Finally, the Nation looks to play a major role on the functioning of the housing sector with a direct intervention trough the Macroprojects urban management tool, which guarantee the role of the State in conjunction with the private sector mainly in order to generate serviced land for social interest housing (VIS), in a competitive manner to enforce on land use planning issues an increasing supply of urban land and housing for low income groups against the informal sector.
References CEDE (2006). “Consulting services on development of city-case studies of the urban settlement pattern, both formal and informal in the last 20 years in the cities of Bucaramanga and Cartagena”. Informe final del Proyecto de Consultoría Housing and Land for the Urban Poor. DPU (2006). “Suelo urbano y vivienda para la población de ingresos bajos: Estudios de caso Bogotá-Soacha-Mosquera; Medellín y área metropolitana” Informe final del proyecto de consultoría Housing and Land for the Urban Poor.
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Annex
Box
Urban Land Price Determinants: Bucaramanga The classic model of urban land value was formulated by Alonso (1964), the basic hypothesis of the model is that the areas closer to the Central Business District have higher values. In its document CEDE (2006) made an exercise for Bucaramanga where they calculated the price gradient for the city, using the area of “Cabecera del Llano” as the CBD.
Graph Bucaramanga: Land values Gradient
0
50000
100000
150000
200000
250000
300000
350000
400000
0 440,02 898,31 1180,41 1391,97 1586,93 1826,03 2193,09 2757,34 2941,38 3374,78 4204,48
Source: CEDE (2006)
We can see that despite the great variance in the relationship between the value of the land and the distance with the CBD, the gradient has the expected negative slope. Additionally to the calculation of the land values gradient, the CEDE performed an econometric analysis where they were looking to establish those factors, besides the distance from the CBD, that affect the land value. The econometric analysis used the following equation:
εβββββ +++++= tureInfrastrucHazzardInformalceDisicei 43210 tanPr Where: • Price(i) =Numeric variable that indicates the average price by squared meter in the neighborhood
(i). • Distance =Numeric variable that indicated the distance between the neighborhood (i) and the CBD. • Informal =Dummy variable that indicates if the neighborhood (i) limits with an informal
settlement. • Hazard =Dummy variable that shows if the settlement is located on an area classified as
hazardous. • Hospital =Dummy variable showing if there is a Hospital in the neighborhood (i). • Park =Dummy variable that indicates if there is a park in the neighborhood (i) • Road =Dummy variable that indicates if the neighborhood is crossed by a main urban
road. • ICT = Dummy variable that shows if a housing development in the neighborhood was built by the ICT The regression results are shown in the following table:
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Table Land Price Determinants: Bucaramanga
Variable Models1 2 3 4 5 6
Constant Coefficient 245,843.3 * 252,918.0 * 221,593.8 * 226,030.0 * 243,649.1 * 215,565.3 *t 13.56 13.89 10.02 10.02 11.63 8.82(P-value) 0 0 0 0 0 0
Distance (-) Coefficient -26.79 * -28.77 * -19.51 *** -24.9 ** -25.11 ** -27.56 *t -2.8 -3 -1.9 -2.6 -2.6 -2.9(P-value) 0.008 0.004 0.063 0.013 0.013 0.006
Informal (-) Coefficient -45,194.6 ** -35,062.7 -43,229.0 ** -39,781.9 *** -43,433.8 **t -2.07 -1.58 -2.03 -1.82 -2.14(P-value) 0.04 0.12 0.05 0.08 0.04
Hazard (-) Coefficient -41,724.6 ***t -1.7(P-value) 0.09
Hospital (+) Coefficient 40,652.8 *** 42,213.0t 1.82 1.06(P-value) 0.08 0.3
Road (+) Coefficient 26,227.6t 1.44(P-value) 0.16
Park (+) Coefficient 22,267.0 19,442.0 ***t 1.23 1.83(P-value) 0.23 0.08
N 45 45 45 45 45 45R-squared 0.6 0.64 0.64 0.63 0.62 0.61P-value 0.001 0.001 0.001 0.001 0.002 0.003*: Signif icant at 99%; **:signif icant at 95%; ***:signif icant at 90%
Expected sign
Fuente: CEDE (2006)
The results confirm the inverse relationship existing between the price of the land and the distance from the CBD. The other variables that have a negative impact of the land value area the vicinity with an informal settlement and to be located in a hazardous area. The variables that have a positive impact on the value are the existence of urban infrastructures as parks and hospitals. We cannot say that these results are surprising; instead they provide additional support to our argument of the informal housing poverty trap. We saw that poor households are the most likely to occupy informal settlements in low-price areas, these settlements lack the basic infrastructure to provide social services (hospitals) and are a real hazard to the life of its inhabitants. These conditions clearly limit the possibility to increase the income of this population, if not reduce it, creating the poverty trap.
Image 1
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Typical Informal Settlments Bogotá
Medellín
Bucaramanga
Cartagena
Image 2 Formation of Informal Settlements: Cartagena
Informal settlement
Ciénaga de la Virgen
Filled terrains
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Image 3 Formation of Informal Settlements: Medellín
Participating Formal and Informal Settlements
Case study Formal Informal
Parques de Potosí Gran BritaliaNueva Ciudad Patios 3Renacer La Isla (S)Mirador de San Ignacio (S) Porvenir Rio (M)Rincon de Santa Fe (S)Caminos de Mosquera (M)
Torres de San Sebastían Santo Domingo SavioAltos de Calazans La CruzLas Flores Brisas del JardínAndalucía El DiamanateBúcaros II (B) Nuevos Conquistadores
Minuto de Dios BarcelonaRefugio Café Madrid
Convivir MorroricoPalmerasTransiciónColoradosPablon
Ciudadela 2000 Rafael NuñezChiquinquirá El PozonNueva Granada Marlinda
Nelson MandelaPolicarpaLa PopaBonanza (T)
S: SoachaM: MosqueraB: BelloT: Turbaco
Bogo
táM
edel
línBu
cara
man
gaC
arta
gena
Comuna Nor-oriental
