June 2002 No.3 A regular series of notes highlighting recent lessons emerging from the operational and analytical program of the World Bank's Latin America and Caribbean Region URBAN UPGRIkDONG ON LATON AMEPHGA AN4D TH0E CAROBBEAM' Deani A. Cira Urban poverty may well be the most critical problem in the One of the striking physical characteristics of urbani Latin American Region (LCR). Much of the region's poverty is the persistent and growing deficiency of shelter population has yet to benefit from the significant social and conditions in the region. Access by the poor to legal and economic reforms that have taken place in the region over affordable land and shelter in the cities of the region has the past several years. It is of great significance, for been difficult for several decades and may be worsening. example, that that urban poverty rates in LCR are the highest According to a survey of 19 countries during the 1990's in the world with 39% of households living bencath the conducted by the Economnic Commission for Latin poverty line. Although poverty rates arc higher overall in America and the Caribbean (ECLAC), the housinig rural areas (55% vs. 39%) than in urban areas in the region, "deficit" was 38 million units (40% of the total housing in absolute terms there are more than twice as many urban stock), of which 17 million constitute a quanititativc deficit poor than rural poor in the region - 68 million rural poor (which may be thought of as unmet demand) and 21 compared with 138 million urban poor.' This means that million representing a qualitative deficit. The latter nearly 7 of every 10 poor people live in urban areas in LCR. constituting structurally deficient housing, or housing that is not properly serviced or is located in highi-risk environments generally considered not suitable for human Urban Poor l)I" settlement. Moreover, increased urbanization will Region 1-louse holds Iispauity continue to increase demand for urban housing, and much (/°) (O/6) of this demand is likely to continue to go unmet. Africa 38.8 12.3 Ar-ab States 28.5 10.2 The large and increasing percentages of the population Asia anl1d P'acific 20.1 6.7 that live in so-call slums (barrias. fivelas, colonii(as. asetainientos informales, etc.) scrve as striking evidence L_atin] Aericanic;m 39.0 17.7 of the shelter problem: and estimated 44% of the popula- Region polm oua tion of metropolitan Caracas live in infonnal settlements, T1ranisitional 23.5 6.1 in Guatemala City (a country still in the urbanization pro- InduLstrializid 12.9 10.5 j cess) that figure is 38%, in Ciudad Juarez, Mexico (a city Source: Urban Indicators Prograinmc 1994-1996 that grew from a population of roughly 500,000 in Latin America is the most urbanized area in the developing world. With an urban population over 75 percent, its urbanization rate is similar to that of highly industrialized countries. Nearly 70 percent of people who live at or below the poverty line live in urban areas. Many live in informal scttlements, with limited.or no access to basic services. They suffer from substandard housing, insecure land tenure, inadequate access to affordable transportation networks, environmental degradation, and increasing social problems such as urban violence. Through its urban projects and programs the World Bank is helping its clients develop medium and long term policies for addressing the problems of urban poverty, the provision of basic infrastructure (water, sanitation, housing and transportation), and city management. Projects differ in their structure whilst the overall objectives remain the same. Some are discrete single-city operations, while in other countries the Bank has supported multi-state projects for on- lending to municipal governments (Brazil, Argentina). A high priority is given to "scaling-up" urban upgrading projects. 1980 to over 1 0 million by 1995) that figure is 40% and in fully community driven, with all project funds and Recife, Brazil, another 40% of the population, or 1 2 million contracting done directly by a community association people, live in such settlements These high percentages are Following improvements, infant mortality rates dropped not entirely uncommon and many cases are growing. One l 90%, crime decreased by 43% and property values increased study suggcsts that Mexico City's population living in ten-fold in two years. informal settlements grew from 47% in 1970 to 60% by 1990.' "CAMEBA ": This on-going project is one of the Bank's largest urban upgrading projects, benefiting 180,000 people The living conditions in these areas are well known, high in 13 low-income, informal settlements in metropolitan environmental health risks, low access to many urban Caracas, Venezuela. The project is approaching the halfway services, deficient drainage and sewerage, inadequate solid point of a five year execution period. One of the most waste management practices, limited access to transport and complex projects of its type, due to the very high densities of congestion from overcrowding. Inadequate shelter in these settlements, the project is proving to be cost effective, crowded, often pern-urban settlements, is also known to lead with per/household investments of less than $3,000 for to excessive crime and violence, especially in rapidly improvements in all urban services. Of particular interest in urbanizing areas where social and civic networks are this project is the emphasis on community participation, and nascent or not yet existent. Moreover, inadequate shelter empowerment (including the entire housing, bundle of shelter, land rights and urban services) undermines the productive potential of "Guarapiranga ". Named after one of the most important low income populations, as housing is often a key reservoirs in metropolitan Sao Paulo, Brazil, this project, productive asset for low-income families. I recently completed and undergoing evaluation, included a I large informal settlements improvement component within a larger water quality improvement project With an average World Bank Response i per family investment of US$4,860 (compared with an average of US$12,000 per household for typical social housing projects), the project benefited approximately Since the early to mid 1990's the LCR region of the World 250,000 people and included significant ivestments in, Bank has becn actively pursuing a progiain of integrated inter alia, inifrastructure, resettlement, environmental upgrading of low-income, informal human settlements, education, drainage, erosion control and risk mitigation. These projects have typically Over 70% of the beneficiaries earned less thani 3 minimum salaries. focused on the city level, -; taking a geographic approach to poverty targeting, and From these, and other, experiences, emphasizing the physical ;,r S #J7i' << § .sj ' lessons can be draNvn that are important improvement of slum ii " for the consideration of future operations conditions. In that regard, the 3-: projects emphasize 3b improvements in drainage, a X ; - i Lessons Learned vehicular and pedestrian J access, water supply and k sanitation, public lighting and L . ^ .; | MPursuing Supportive Housing and Land hosaiaiong forbthos livhing ind roieguat: lhegarlifeanistutiona ofurbame electricity supply. The Policies: The proliferaton of urban provision of resettlement . ->X^iJ * F - slums is due in large part to obsolete housmg for those hvlng m . 0 0 regulatory, legal and institutional frame- highly vulnerable areas, the - -, v works at the local level goverming land provision of land tenure , w hlslF l 7¶; o3i g>{iffl use, development standards, land regis- regularization, and in some tration and titling These regulations are cases, micro-credit for 1 1lll 11% ffi often exclusionary, insisting on develop- housing improvements are ment norms and standards that are out- also components of these s side the realm of the poor to pay and projects Among the better - subdivision procedures are often over known upgrading projects are f S; burdensome, leading to informal land subdivision, thus excluding the possibil- 'El Mezqwital" This small, ity to register titles under such "Illegal" pilot project in Guatemala City, known by the name El conditions. Likewise, well intentioned Mezquital (one of the benefited communities) was completed federal or national housing policies that focus on the provi- in 1998, benefiting a total of 20,000 people with an sion of complete housing packages (as opposed to products investment of US$4 5 million It is considered one of the like sites and services, progressive housing or demand, early examples of successful upgrading projects that was rather than supply-side subsidies) often have the unintended 2 effect of filtering-up to higher income groups, especially Macro Perspective and Integration: City-based urban up- when private mortgage market alternatives are not available grading projects must take an macro perspcctive to cffec- to middle and lower-middle class households. Reforming tively integrate often isolated, low-income communities thcse structural problems remains one of the greatcst chal- into the overall fabric of the city. This is a lesson learned lenges, but progress is being made in countries like Brazil, from the Caracas project which include significant invest- Mexico on both the land and housing sides, and in Venezu- ments in road access to into the low-income settlements. cla with regard to land and development standards. Likewise, experience from projects such as the PROSANEAR project in Brazil (which focused on the pro- Cost Recovery: Upgrading projects need to include an ex- vision of only water supply and sanitation in low-income plicit cost-recovery strategy up-front. In that regard, it is communities), has demonstrated the need to integrate sector important to use economic analysis tools as part of project investments for maximum technical and cost effectiveness planning, linked with survey mechanisms to determine ca- (both long-term capital costs and operating costs). This re- pacity and willingness of communities to pay for invest- quires careful inter-institutional coordination. ments. In the cases of Caracas and the Recife projects, economic s r *--; ; - -r -- - Instituttional Appropriateness: Ex- analysis was used to identify the L I J perience has shown that urban up- level of investments that would be ¶ grading projects can be delivered affordable to the beneficiaries and @ ,: using different institutional models. still m-aximnize the welfare benefits f .- In the case of Caracas, for examiple, of the project with cost recovery the national govemnment takes the and subsidy policies designed ac- i `i leading role in project planning and cordingly. Cost recovery strate- e,.. - ; ; execution with cooperation from the gies that are designed up-fi-ont * -I municipalities. This is so because have the added benefitof allow for _L A the municipalities have generally the development of appropriate .r weak technical capacity and require subsidy policies if needed. Spe- r' I'k I the coordinating capacity of the na- cific strategies need to be devel- , 4 , P .' tional government. But the model is oped for public and private goods, clearly second best. Upgrading understanding that there may be projects should generally be imple- justification for the subsidization . r in mented at the municipal level. In of some public goods, while full r the case of Recife, this is the case, cost recovery for private goods s , - P ^ but with strong state assistance in (such as housing improvement) -.. . I A the coordination of investments that should be maximized. Having the ;- -j* d are inter-municipal in naturc, such cost-recovery and subsidy policy . ' s as certain investments in transport. established up-front makes it - ;- Likewisc, the right models can easier to engage the community - - * - search for appropriate roles of the on these issues. private sector both in financing in- vestmcnts and in operations and maintenance of invest- Coninzunity Participation: Community participation, from ments. Such models were considered in Ciudad Juiircz, the outset in project design, is one way to ensure that the Mexico using micro-credit for housing and engaging the most appropriate infrastructire services are used. While private sector to capitalize a community investment trust community participation may appear intuitive and simple, it fund for infrastructure. is not. There are some important lessons to keep in mind: (i) much of the success of participatory approachcs depends on the ability of institutional partners to work as a unified Land Tenure Regularization: This is one of the most chal- interlocutor (i.e. planning departments working with social lenging aspects of upgrading projects. It is considered cs- service agencies and sectoral service providers); (ii) the sential to long-term sustainability of projects and in some provision of socio-technical support to the community may cases is a requirement to charge beneficiaries for scrvices only be recognized as a benefit in the long-run; and govern- ; or property taxes. It is also considered by many to be es- ment institutions may not be wiling to suffer the initial sential for accessing credit. It has proven difficult il most costs of this; (iii) not all civil society organizations may be i projects to do on a large scale. Innovations are oftten neces- willing to participate if there is a perception of "turf inva- sary, such as in the case of Caracas where they arc experi- sion," but it is important to offer the option of participation i mnenting with horizontal condominium arrangements of to as wide an array of civil society organizations (CSOs) as ownership. A lack of political will is a common reason possible; and (iv) careful selection of CSO for participation, why land tenure objectives are often failed to be met in using pre-determined criteria, is important for the success projects. of any participatory initiative, and this should bc based on technical capacity and willingness to collaborate. What's Next? See also... Current and future projects will continue to be a mix of city I "Mejorenios Niuestro Barrio" - Neighborhood Participa- or metropolitan-based urban upgrading projects combined i tory Plannin in Ciudad Juirez, Mexico with attempts to scale-up to the national level Both are I legitimate approaches Regarding the former, metropolitan- This note by Dean Cira and Ivo Imparato (both World Bank) based initiatives are currently underway in Caracas, is taken from "Thinking out Loud III: Innovative Case Stud- Venezuela and Recife, Brazil. New projects are planned for ies On Participatory Instruments (Spring 2002)4 and de- Bogota, Colombia and Salvador and Sao Paulo, Brazil scribes the neighborhood-based participatory planning pro- These projects will draw fiom earlier lessons learned and cess undertaken in two low-income, informal settlements in attempt to innovate, in areas like income generation and Ciudad Juarez, Mexico in 2000. The process represents a social services integration. The next wave of upgrading breakthrough for the city on several levels. First, it is the strategies also includes projects that attempt to bring-scale at first experience of integrated participatoiy planning oni a the national level Different from city-based iniitiatives which neighborhood level that has ever been undertaken in Ciudad have typically focused on the physical aspects of upgrading, Juarez and serves as a departure from the one-off invest- these initiatives will take more explicit aim at land and ments typically made in these areas. Second, it represents housing policies in order to increase access by the poor to ithe possiblity of more effectively and efficiently allocaing urban assets. In that regard, these projects place greater municipal funds for the financing of basic services and i- emphasis on the first of the lessons learned of pursuing frastructure in the informal settlements, based on the ex- supportive housing and land policies which is critical in j pressed demand of the beneficianes themselves Finally, as preventing the growth of infonial settlements in the future nearly 40% of the total population of Ciudad Juarez lives in Authorities in Mexico, Brazil and Venezuela are pursing this informal settlements, the pilot project serves as a basis for approach with the World Bank. scaling up the use of participatory planning by training a critical mass of technicians and community members in par- ticipatory methodologies. Get the whole document on our website (http// www worldbank.org/lac), under "Urban Development" About the Author Notes The author is an urban specialist in the Urban Cluster of the Finance, Private Sector and Infrastructure group within the 'Mac Donald Joan, Francisco Otava, Daniela Simioni, Latin America and the Caribbean Region of the World Bank I Michiko Komorizono, "Sustainable Development of Human Settlements Achievements and Challenges in Housing and Urban Policy in Latin America and the Caribbean," Serie Medio Ambiente y Desarrollo #7, United Nations, 1998 2Average of the ration of top to bottom income quintiles for individual cities. 3Gilbert, Alan, The Mega-City in Latin America, United Na- tions University Press, 1996. 4Katherine Bain et al (edited by Moji Anderson), THINK- ING OUT LOUD ITT. 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