Una versión más actualizada de este artículo está disponible como parte del capítulo 5 del libro Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.
Pocos países de América Latina (o del resto del mundo) se han atrevido a poner en práctica reformas tan radicales de la política de tierras urbanas como lo ha hecho Chile en los últimos 20 años. En 1979 el gobierno comenzó a aplicar las políticas de desregulación mediante la publicación de un documento donde se establecía que la escasez de la tierra era un producto artificial de la excesiva regulación, que había llevado a la virtual eliminación de los límites de crecimiento urbano.
Desde entonces ha habido cambios numerosos en la morfología y estructura interna de las ciudades chilenas, pero la evaluación de dichos cambios varía según la posición ideológica de quien evalúa. Si bien las políticas urbanas explícitas de orientación social han propiciado un mejoramiento significativo en lo que se refiere al acceso a la vivienda para la población de bajos recursos, algunas personas sostienen que la segregación espacial derivada de tales políticas ha perjudicado a la sociedad al indirectamente disminuir la calidad de vida, impedir el acceso al trabajo y agravar la alienación social.
Incluso antes del período del gobierno militar de 1973 a 1990, Chile estaba reconocido por su sistema político unitario y centralista, caracterizado por una fuerte presencia del Estado en la economía y la política. Esta sociedad con cultura relativamente homogénea se diferencia de otros países latinoamericanos por su fuerte tradición legalista. De la misma manera, las ciudades chilenas exhiben marcados contrastes cuando se las compara con sus homólogas latinoamericanas. Prácticamente no hay mercados de tierra informales; la tenencia de la tierra ha sido casi completamente regularizada mediante programas públicos radicales; y la mayoría de los pobres urbanos viven en áreas urbanizadas cuyas calles principales están pavimentadas. La violencia urbana, a pesar de su tendencia creciente, es aún mínima si se la compara con el resto del continente.
Políticas y problemas de la liberalización
Entre los aspectos más innovadores de la política urbana chilena figuran los siguientes:
Si bien, algunos de los logros de estas políticas de liberalización se han reconocido ampliamente como positivos -particularmente en lo que se refiere a la regularización legal y física o urbanística y la cantidad de vivienda social proporcionada- muchos chilenos creen que las políticas de los últimos 20 años han sido una fuente de nuevos problemas, entre ellos:
No está claro si estos cambios urbanos pueden atribuirse directamente a la eficacia de las políticas urbanas de mercado, o a la positiva evolución de la economía chilena en general. El crecimiento sostenido del producto interno bruto (GDP), con un promedio del 7 % anual desde 1985, se interrumpió sólo recientemente debido a los efectos de la crisis asiática.
Expansión del debate
A pesar de que la liberalización de los mercados de suelo urbano en Chile constituye una experiencia interesante e innovadora desde un punto de vista internacional, el debate público interno ha sido limitado. No obstante, los logros y problemas de la liberalización han llegado a tal punto de importancia que últimamente han estimulado un nivel generalizado de preocupación y una variedad de planteamientos al respecto. Más aún, el gobierno está proponiendo una serie de modificaciones de la actual “Ley General de Urbanismo y Construcciones”, que traerían consigo un número de cambios significativos, entre ellos:
Con el fin de facilitar una discusión concentrada en los temas anteriores, Carlos Montes, Presidente de la Cámara de Diputados de Chile, invitó al Instituto Lincoln a participar en un seminario coordinado con el Instituto de Estudios Urbanos de la Pontificia Universidad Católica de Chile. El seminario, llamado “A 20 años de la liberalización de los mercados de suelo urbano en Chile: Impactos en la política de vivienda social, el crecimiento urbano y los precios del suelo”, tuvo lugar en octubre de 1999 en la ciudad de Santiago. Allí se reunieron miembros del Congreso chileno y de la comunidad comercial (promotores, líderes financieros, etc.), oficiales de organismos públicos (ministerios, municipalidades, etc.), académicos y representantes de organizaciones no gubernamentales para participar en un animado debate. En la discusión se notó una marcada polarización ideológica entre las metodologías “liberal” y “progresiva” utilizadas para entender y resolver los asuntos de la liberalización, es decir, “más mercado” frente a “más Estado”.
Desde el punto de vista liberal4, estos problemas emergen y persisten debido a que los mercados de tierra no han sido nunca suficientemente liberalizados. De hecho, algunos liberales insisten en que la intervención pública no desapareció nunca, y creen que la regulación más bien aumentó después de que Chile retornara a la democracia en 1990. Por ejemplo, los liberales citan varios medios, a menudo indirectos, que utiliza el Estado para restringir el libre crecimiento de las ciudades, tales como cuando se intenta ampliar áreas designadas con protección ambiental y cerradas a usos urbanos, o se impone un criterio oficial y casi homogéneo de densificación para todo espacio urbano. También aseveran que los ciudadanos deberían tener la libertad de elegir diferentes estilos de vida, y que las autoridades deberían limitarse a informar a los ciudadanos sobre el costo privado y social de sus opciones, con el entendimiento implícito de que tales costos están reflejados en los precios del mercado cuando hay un funcionamiento eficaz de los mercados de suelo urbano, es decir, cuando están completamente liberalizados.
La principal explicación ofrecida por los liberales sobre los problemas de equidad y eficiencia que enfrenta el desarrollo urbano chileno actual son los avances insuficientes en la aplicación de criterios para “internalizar las externalidades”, particularmente externalidades negativas, por aquellos que son responsables por ellas. Tal como lo han clamado apasionadamente algunos de los representantes de este grupo, se debería permitir a los agentes privados actuar con libertad, siempre que éstos estén dispuestos a hacerse cargo de los costos sociales involucrados.
Por otra parte, los progresistas creen que la liberalización se ha excedido en su abordaje de mercado y ha dejado muchos problemas sin resolver, tales como el aumento en los precios del suelo; los problemas en la calidad y durabilidad de la vivienda; las condiciones de servicio de la tierra; los problemas sociales asociados con la pobreza urbana; y los problemas de eficiencia y equidad derivados de los patrones de crecimiento de las ciudades, p. ej., la disparidad entre áreas dotadas de servicios públicos y las localidades seleccionadas para proyectos privados de desarrollo.
Estas críticas reconocen la naturaleza imperfecta de los mercados urbanos y la necesidad de tener mayores niveles de control e intervención. Entre las formas de intervención recomendadas por muchos progresistas se encuentran los instrumentos de captura de plusvalía, los cuales raramente han sido empleados o incluso contemplados en programas de financiamiento para la provisión pública de nueva infraestructura y nuevos servicios urbanos. La creación de tales mecanismos apoyaría la idea de internalizar las externalidades, un punto de relativo consenso entre progresistas y liberales. La diferencia principal es que los liberales restringirían la captura de plusvalía a la recuperación pública de costos específicos, mientras que los progresistas considerarían el derecho a capturar la plusvalía entera que resulte de cualquier acción pública, bien sea como resultado de inversión como de regulación.
En términos más generales, los progresistas claman que no todo puede medirse estrictamente en términos monetarios. Hay valores y objetivos urbanos relacionados con la política pública que no pueden conseguirse a través del mercado, ni siquiera por ley, tal como el sentido de comunidad. Aunque mayormente se le desatiende en las nuevas opciones habitacionales facilitadas por promotores privados a familias de bajos recursos, tales como el sistema de vouchers, la solidaridad comunitaria es un asunto de enorme importancia para contrarrestar los problemas sociales que la segregación espacial tiende a exacerbar. La protección ambiental es otro ejemplo de un objetivo de política urbana para el cual las “etiquetas de precios” son de dudosa eficacia.
Con respecto al crecimiento libre de las ciudades y la idea de respetar las opciones para sus ciudadanos, los progresistas apuntan los fuertes costos ambientales y sociales que normalmente acompañan el crecimiento descontrolado. También hacen notar el hecho de que el único grupo que realmente puede elegir su estilo de vida a través del mercado es la minoría pudiente. Si bien conceden que hay beneficios en la concentración, los progresistas también expresan sus inquietudes sobre el exceso de densificación. Algunos chilenos han expresado interés en una autoridad metropolitana que maneje los asuntos regionales, y también en el uso de inversión en infraestructura pública como forma de orientar el crecimiento.
Las respuestas adecuadas a estos asuntos y perspectivas implican algo que va más allá de soluciones técnicas o fiscales, tales como el punto al cual los promotores realmente pagan por el costo total de los cambios que imponen en la sociedad (para no hablar del problema de evaluar los costos con precisión) o la sustentación del sistema de vouchers bajo demanda, que constituye la base de la política habitacional de Chile. Las soluciones también involucran inquietudes de mayor amplitud y con más contenido valórico, tales como los costos ambientales del crecimiento descontrolado y la importancia de mantener las identidades e iniciativas comunitarias locales. La discusión continúa en el Congreso y en otros entornos, pero es de esperar que pase un tiempo antes de que los bandos opuestos lleguen al consenso.
Martim O. Smolka es Senior Fellow y Director del Programa para América Latina del Instituto Lincoln. Francisco Sabatini es profesor asistente de la Pontificia Universidad Católica de Chile. Otros contribuyentes a este artículo fueron Laura Mullahy, asistente de investigación, y Armando Carbonell, Senior Fellow, ambos del Instituto Lincoln.
Notas: En contraste con el resto del continente, las drogas no eran un problema mayor en Chile hasta hace poco tiempo.
2 El área metropolitana de Santiago se compone de 35 jurisdicciones administrativo-políticas independientes llamadas comunas.
3 Véase Gareth A. Jones, “Comparative Policy Perspectives on Urban Land Market Reform”, Land Lines, noviembre de 1998.
4 El uso del término “liberal” en este contexto corresponde a su connotación en Chile, la cual se refiere a la fuerte influencia del principio económico del libre mercado, tal como la aboga la teoría desarrollada por la Escuela de Chicago.
Fuentes: Francisco Sabatini y colaboradores, “Segregación social en Santiago, Chile: Conceptos, métodos y efectos urbanos” (monografía, 1999); y Secretaría Ejecutiva de la Comisión de Planificación de Inversiones en Infraestructura de Transporte (SECTRA), “Encuesta de recorridos de origen y destino en Santiago”(1991).
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The complexity that characterizes the interaction of transportation and land use in urban areas is matched by the variety of the disciplines called on to address these issues, including economics, urban planning and civil engineering. In recent decades, communication among scholars in these disciplines has improved and the acceptance of a common base of theory and method, based on economics, is increasing. The Taxation, Resources and Economic Development (TRED) conference on “Transportation and Land Use” held at the Lincoln Institute in October 1996 focused on these issues. Ten papers presented at that conference are now published in a special issue of the journal Urban Studies. The papers are organized into four groups as summarized below.
Trends in Urban Development
Gregory Ingram’s paper on “Metropolitan Development: What Have We Learned?” documents the worldwide prevalence of several trends that characterize modern urbanization. Employment decentralization and the emergence of multiple employment centers in large metropolitan areas are observed worldwide in both developing and developed countries. Although employment continues to be more centralized than population, the typical Central Business District does not contain more than about 20 percent of jobs, and much smaller percentages are common in the U.S. Manufacturing employment has become more decentralized than service employment. Decentralization has reduced traffic congestion and travel distances and has contributed to a weakening of transit systems. The increased affordability of motorized transportation worldwide has led to more trip-making, with work trips typically being less than a third of all trips in urbanized areas.
Peter Gordon, Harry Richardson and Gang Yu find evidence that the suburbanization and exurbanization of employment in the U.S. has picked up its pace since 1988. In their paper, “Metropolitan and Non-Metropolitan Employment Trends in the U.S.: Recent Evidence and Implications,” they argue that the ability of manufacturing and even of services to locate in exurban and rural areas, shunning inner-suburban and central city locations, is a consequence of the continued weakening of the agglomeration economies that shaped the now outdated downtown-oriented city.
Robert Cervero and Kang-Li Wu examine the relationship between average commuting distance and employment subcentering in their paper, “Subcentering and Commuting: Evidence from the San Francisco Bay Area, 1980-1990.” They are concerned with changes in employment densities in 22 employment subcenters and with the commuting distances and travel times of those employed in these subcenters. The authors find that employment densities have increased more in the outlying suburban centers and that commuting to these centers has experienced modal shifts away from transit and in favor of the automobile. According to their data, while jobs in these centers grew by 18 percent during the decade, average one-way commuting distances to these 22 subcenters increased by 12 percent, and average one-way travel times rose by only 5 percent.
These findings are consistent with theory: with the number of subcenters fixed and the degree of spatial mismatch between jobs and housing invariant with job growth, an increase in the number of jobs in each subcenter should result in longer commutes on average. If new subcenters are spawned in between existing ones or new ones develop in outlying areas-something that does not appear to have occurred in the Bay Area-then average commutes should decrease. The 22 subcenters account for less than half of total employment in the Bay Area, the rest of the jobs being broadly dispersed throughout. Because such dispersed employment is not included in their study, we do not know about the total effect of job decentralization on average commute distances and times.
Genevieve Giuliano’s paper, “Information Technology, Work Patterns and Intrametropolitan Location: A Case Study,” examines the impact of information technology, including the advent of fax machines, computers, modems and the internet. One of her central observations is that while the U.S. labor force increased by 14 percent from 1980 to 1990, the “contingent workforce,” a diverse group of temporary workers, part-time workers, the self-employed and business service workers, increased much faster, from about 25 to 33 percent.
This trend implies that the information revolution is causing structural shifts in the labor force as more and more workers offer temporary services to a variety of employers and, as a result, do not have a long-term attachment to any one employer. Theory suggests that such workers should locate in a way that is sensitive to their expected accessibility to jobs. Also, the advent of information technology should facilitate “telecommuting,” thus reducing the need for physical proximity to jobs.
Giuliano uses the 1990 U.S. Census Public Use Microsample for the Los Angeles region to compare the residential location and commuting patterns of contingent and non-contingent workers. The socioeconomic complexity of contingent workers makes it difficult to draw clear conclusions, but Guiliano does find that those contingent workers who live in suburban areas are likely to live in high amenity areas. Controlling for socioeconomic factors, commuting distances are shorter for part-time workers than they are for full-time workers, and among full-time workers the self-employed have the shortest commutes.
Agglomeration Economies
The next two papers offer empirical contributions on intra-urban employment agglomeration. “Spatial Variation in Office Rents within the Atlanta Region,” by Christopher Bollinger, Keith Ihlanfeldt and David Bowes, is a hedonic rent study for office buildings in the Atlanta area from 1990 to 1996. The authors find that part of the rent differences among office buildings is due to differences in wage rates, transportation rates and proximity to concentrations of office workers. More importantly, the convenience of face-to-face meetings facilitated by office agglomerations is also reflected in office rents, providing evidence that agglomerative tendencies continue to be important in explaining office concentrations, despite the ability of information technology to reduce the need for some such contacts. In their paper, “Population Density in Suburban Chicago: A Bid-Rent Approach,” Daniel McMillen and John McDonald show that population density patterns in the Chicago MSA are strongly influenced by proximity to subcenters, which include the Central Business District, O’Hare Airport and 16 other centers. Site-specific variables such as access to commuter rail stations or highway interchanges have smaller influences on population densities.
Travel Behavior and Residential Choice
Among the challenges posed by the evolving trends in transportation and land use is a better explanation of the role of non-work travel in residential location decisionmaking. Motorized mobility has greatly increased non-work travel, thus weakening the relevance of the now classical commuting-based theory of residential location. While information technology may result in more telecommuting, the importance of non-work travel relative to work travel may grow even more in the future.
Two papers attempt to develop new techniques that can be used to explain the influence of non-work travel behavior on residential location and land use patterns, and vice versa. Central to this research is the notion that when a household makes a residential choice decision it will consider the pattern of non-work trips its members are likely to make. Accessibility to non-work opportunities is likely to be important and, for many households, perhaps more important than accessibility to jobs.
Moshe Ben-Akiva and John Bowman model the probability of choosing a residential location by treating the non-work trip patterns and activity schedules of the household’s members as explanatory variables. Their model allows the treatment of trips as tours with stops at multiple destinations. In their paper, “Integration of an Activity-Based Model System and a Residential Location Model,” the authors report that their model does not fit the data as well as a work-trip-based comparison model. But, the non-work accessibility measures are more appealing conceptually and allow a richer set of predictions and simulations to be made.
Until recently, economists have suppressed the importance of non-work trips in their theories of land use. Planners have viewed land use planning as a tool that can affect behavior and travel demand. But what is the evidence that travel patterns can be influenced meaningfully by manipulating land use at the neighborhood level or in a larger area?
Marlon Boarnet and Sharon Sarmiento tackle this question by means of a travel diary survey of Southern California residents. Their paper is titled “Can Land Use Policy Really Affect Travel Behavior? A Study of the Link Between Non-work Travel and Land Use Characteristics.” The number of work trips made by residents is explained by sociodemographic variables describing the residents and by land use characteristics describing their place of residence. Generally, the land use variables describing the neighborhood are not statistically significant, but future studies could follow this approach by trying more complex specifications and using better data.
Jobs-Housing Mismatch
As first stated by John Kain in 1968, the “spatial mismatch hypothesis” claimed that black central city residents are increasingly at a disadvantage economically as jobs disperse to the suburbs. Many suburban governments limit the quantity of high-density/low-income housing, forcing workers to make long, expensive commutes. Although there is a wealth of empirical work on the mismatch hypothesis, Richard Arnott’s paper, “Economic Theory and the Mismatch Hypothesis,” is one of the first attempts to formulate a microeconomic theory of the mismatch problem. In Arnott’s model, jobs flee to the suburbs because of the advent of international trade (relaxation of global trade barriers) and the emergence of suburban-based inter-city truck transport after World War II. At the same time, large-lot zoning and discrimination in suburban housing markets force minorities to reside in central cities. An increase in the cost of commuting effectively lowers the wage paid to low-skilled labor from the city.
In “Where Youth Live: Economic Effects of Urban Space on Employment Prospects,” John Quigley and Katherine O’Regan investigate how neighborhood of residence and access to jobs affect the employment prospects of minority youth. Black youth unemployment rates are higher in metropolitan areas where blacks are more isolated geographically. Controlling for socioeconomic characteristics, minority youth who have less residential exposure to whites are more likely to be unemployed. Finally, controlling for socioeconomic characteristics as well as residential exposure to whites, minority youth living in neighborhoods that are less accessible to jobs are more likely to be unemployed. While these findings support the mismatch hypothesis, they also suggest the importance of social networks and spatial search as important mechanisms in the intra-urban labor market.
Alex Anas, professor of economics at the State University of New York at Buffalo, was the editor of the special issue of Urban Studies (Vol. 35, No. 7, June 1998). The article and figures used in Land Lines are adapted with permission.
Note: Ben Chinitz, former director of research at the Institute, helped organize the 1996 TRED conference and the following colleagues served as discussants of the papers: James Follain, Vernon Henderson, Douglass Lee, Therese McGuire, Peter Mieszkowski, Edwin Mills, Sam Myers, Dick Netzer, Stephen Ross, Anita Summers, William Wheaton, Michelle White and John Yinger. The conference participants were saddened when news arrived that William Vickrey, who had been named a Nobel laureate in economics only a few days before, had passed away while traveling to the conference. Professor Vickrey had been a leading thinker on issues of transportation and land use and a regular attendee of previous TRED conferences. The special issue of Urban Studies based on the 1996 conference serves as a tribute to his memory.
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Water companies and the communities they serve have been grappling for years with complex issues of water treatment and provision, watershed management, public finance and control over regional land use decisionmaking. The federal Safe Drinking Water Act of 1974 prompted water providers across America to face a dilemma: “to filter or not to filter.” Some states or regions require filtration to ensure water quality, but elsewhere communities explore alternative strategies to both protect natural filtration processes in their watersheds and avoid the enormous costs of installing water treatment plants.
The hard-fought conversion of the New Haven Water Company from a private, investor-owned company to a public regional water authority provides an informative case study of a partnership strategy. In the process of hammering out agreements on difficult land use and tax issues, the city and surrounding suburbs succeeded in breaking down conventional barriers and recognized that regional solutions can meet shared needs for a safe water supply, open space protection, recreation and fiscal responsibility.
The drama unfolded in 1974, when the Water Company attempted to sell over 60 percent of its 26,000 acres of land in 17 metropolitan area towns to generate capital for filtration plant construction. The announcement of this massive land sale created vehement opposition throughout the state. Residents of the affected towns viewed the largely undeveloped land as an integral part of their community character. They feared losing control of the land as well as environmental damage and increased costs associated with potential new development.
Several New Haven area legislators recognized the critical link between the city and its watershed communities. They introduced legislation imposing a moratorium on the land sale and proposing public ownership of the water works. New Haven Mayor Frank Logue countered with an announcement that the city planned to buy the water company under a purchase option in a 1902 contract. The suburban towns responded by promoting regional ownership as the only viable alternative to city control.
After a lengthy feasibility study, and despite a gubernatorial veto, legislation enabling the creation of the South Central Connecticut Regional Water Authority (RWA) was enacted in 1977. In addition, separate legislation classified all utility-owned watershed land and severely restricted its sale. The sale restrictions combined with standards for source protection, provisions for public recreation and consideration of the financial impact on ratepayers, also diminished the land’s market value, thereby limiting the Water Company’s ability to use the land as a source of capital.
Regionalization of the Water Company also required a regional approach to taxation. This was the most difficult obstacle to overcome in passing the RWA enabling legislation. With New Haven Water Company’s projected capital investments in excess of $100 million, the region’s towns had looked ahead to vastly increased tax revenues from the private utility. However, New Haven, with the majority of consumers, was more concerned with keeping water rates low.
The conflict between city and suburbs was resolved through the principle that the regionalization of the water utility would cause no erosion of the tax base. Under the agreement, each town would receive payments in lieu of taxes (PILOTs) on all property acquired by the RWA, equivalent to the taxes that would be paid by a private owner. However, while these payments would rise and fall with future assessments, the RWA would not be required to make such tax-substitution payments for any new capital improvements.
Lessons of Regional Resource Sharing
In addition to forcing a reconsideration of the balance between suburban tax bases and urban water rates, New Haven’s Regional Water Authority has broadened its own mission. While protecting the water supply is the primary focus of all RWA land use policies, the authority also manages recreational use of the land to meet the needs of both inner city and suburban residents.
The early success of the conservation and recreational use plans depended on public participation in formulating the RWA Land Use Plan. Many types of active recreation would have been unsuitable for water supply land, but it was determined that hiking and fishing, the two most popular activities, could be conducted without threatening water quality.
The RWA’s active program for policing the watersheds was reinforced by establishing a center to educate future consumers on water supply protection. Located at the base of the dam at Lake Whitney, the Whitney Water Center annually teaches thousands of children the basics of drinking water science. It emphasizes the interdependence of source protection and safe drinking water.
Primary among the lessons to be learned from the New Haven Water Company’s ill-advised land sale proposal is that the value of a water supply watershed as a natural and human resource is far greater than its value as a market commodity. Management of the watershed’s natural resource potential must extend beyond the collection and distribution of water to include the needs of the people who live within the watershed. At the same time, limiting watershed land activities to low-risk uses minimizes the water treatment costs that are still necessary for safe drinking water.
Regional cooperation need not begin and end with water. Developing economic and ecological partnerships between cities and their suburbs for tax-sharing, recreation, and education recognizes that the economic and ecological concerns of all residents in a metropolitan region are interdependent. Successfully bucking the trend toward privatization, the RWA demonstrates that regional resource sharing is the most viable way of meeting the needs of New Haven and its suburbs.
Watershed Protection vs. Filtration in Other Regions
The public acquisition of the New Haven Water Company in the 1970s provided a preview of 1990s approaches to managing water resources. Today, water supply management is increasingly becoming watershed management, with plans reflecting the broader ecological functions of watersheds and the importance of partnerships with local residents. Conflict resolution has become an essential skill for today’s watershed managers.
Watershed land acquisition continues to be a key filtration avoidance strategy in many areas. New York City has the nation’s largest unfiltered water supply, and some experts have called on the city to develop programs to filter its drinking water. However, New York Governor George E. Pataki has taken the position he would “do whatever it takes to avoid filtration,” from working with farmers and businesses on mutually beneficial voluntary programs to buying up to 80,000 acres from willing sellers to protect the water supply.
New Jersey Governor Christine Todd Whitman has committed to a “hands across the border” $10 million contribution toward purchasing the New York portion of the two-state metropolitan watershed in Sterling Forest, which is threatened with commercial recreational and housing development. The nonprofit Trust for Public Land and the Open Space Institute are negotiating the purchase on behalf of both states, and recent congressional action has guaranteed funding for the project.
In central Massachusetts, the Metropolitan District Commission’s Quabbin Reservoir has met the Safe Drinking Water Act’s criteria as an unfiltered water supply source for the Boston area, but the MDC’s Wachusett Reservoir has not. A recently approved $399 million state open space bond includes funds for land acquisition in the Wachusett watershed.
Acknowledging the essential function that undeveloped land serves in preventing contaminants from reaching water supplies is long overdue. But is watershed source protection alone a viable alternative to filtration?
In North Carolina, where all surface water supplies are already filtered, state legislation requires local water authorities to develop watershed land use plans that must be approved by the state. Although such legislation can reduce the health risks of watershed development and the cost of water treatment, it cannot prevent future development.
Our conclusion is that the combination of watershed protection and filtration is a proven, cost effective approach to ensure safe drinking water while also building partnerships to implement regional land use policies.
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Dorothy S. McCluskey was a Connecticut State Representative from 1975 to 1982 and chaired the Environment Subcommittee on the Sale of Water Company Land. She subsequently served as director of government relations for The Nature Conservancy Connecticut Chapter. Claire C. Bennitt, secretary-treasurer of the Regional Water Authority since 1977, was a resident of North Branford when the threatened land sale galvanized the New Haven region. She worked with Rep. McCluskey as her administrative assistant in the state legislature. They have written Who Wants to Buy a Water Company: From Private to Public Control in New Haven, to be published in early 1997 by Rutledge Books, Inc., of Bethel, Connecticut.
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As a part of the educational activities of the Lincoln Institute’s Latin America Program, a course on “Large Urban Projects,” held in Cambridge last June, focused on the most important and challenging aspects of this land planning issue. Academics, public officials and representatives from private enterprises in 17 cities participated in the presentations and discussions. This article presents a synthesis of the principal points, questions and challenges raised in carrying out these complex projects.
Large urban redevelopment projects have become an important issue in many Latin American countries recently, due in part to changes motivated by the processes of globalization, deregulation and the introduction of new approaches in urban planning. These projects include varied types of interventions, but they are characterized primarily by their large size and scale, which challenge traditional instruments of urban management and financing.
Urban projects on a grand scale are not considered a novelty in Latin America. The diverse elements of existing developments include the revitalization of historic centers; conversion of abandoned industrial facilities, military areas, airports or train stations; large slum rehabilitation projects; and construction of innovative public transportation models. However, at least four important features characterize this new type of intervention:
The last feature is reinforced by the influence of different planning strategies and the impacts of large urban projects in various cities around the world (Powell 2000). One project that has influenced many city planners and officials in Latin America was the transformation of Barcelona in preparation for the Olympic Games in 1992 (Borja 1995). Several projects in Latin America have been inspired by, if not directly emulated, this approach (Carmona and Burgess 2001), but it also has faced serious criticism (Arantes, Vainer and Maricato 2000). It has been seen as a convenient process through which a group of decision makers or private interest stakeholders manage to bypass official planning and policy channels that are seen to be too dependent on the public (democratic) debate. As a result most such projects tend to be either elitist, because they displace low-income neighborhoods with gentrified and segregated upper-class land uses, or are socially exclusionary, because they develop single-class projects, either low-income settlements or high-income enclaves, in peripheral locations.
Large-scale projects raise new questions, make inherent contradictions more transparent, and challenge those responsible for urban land analysis and policy formulation. Of special importance are the new forms of management, regulation, financing and taxation that are required for or result from the execution of these projects, and in general the consequences for the functioning of land markets.
Size, Scale and Timeframe
The first issue that emerges from a discussion of large-scale projects has to do with the ambiguity of the term and the necessity of defining its validity. Size is a quantitative dimension, but scale suggests complex interrelations involving socioeconomic and political impacts. The wide variety of feelings evoked by large projects shows the limitations in being able to restore a vision of the urban whole and at the same time its global character (Ingallina 2001). This issue has just begun to be discussed in Latin America, and it is framed in the transition to a new approach in urban planning, which is related to the possibility and even the necessity of constructing a typology and indicators for its analysis. Issues such as the emblematic character of these projects, their role in stimulating other urban processes, the involvement of many actors, and the significance of the impacts on the life and development of the city are all part of the discussions. Nevertheless, it is the scale, understood as being more than just simple physical dimensions, that is the central core of this theme.
Since the scale of these projects is associated with complex urban processes that combine continuity and changes over the medium and long terms, the timeframe of their execution must be conceived accordingly. Many of the failures in the implementation of such projects have to do with the lack of a managing authority that would be free or protected from the political volatility of local administrations over time.
The cases of Puerto Madero in Buenos Aires and Fenix in Montevideo, the first completed and the second in process, offer examples of the difficulties in managing the scale and timing of development in the context of economic situations and policies that can change drastically. Twelve years after its construction, Puerto Madero has not yet stimulated other large-scale projects, such as the renovation of nearby Avenida de Mayo, nor appreciable transformations in urban norms.
The scale and timeframe are particularly important for the project in Montevideo, raising doubts about the feasibility of executing a project of this scale in relation to the character of the city, its economy, and other priorities and policies of the country. Its goal was to generate a “work of urban impact,” in this case promotion of public, private and mixed investments in a neighborhood that lost 18.4 percent of its population between 1985 and 1996, and focusing on an emblematic building, the old General Artigas train station. Most of this work has been executed, with a loan of $28 million from the Inter-American Development Bank, however the percentage of public and private investments are minimal and the Fenix project is having to compete with another large-scale corporate-commercial development located east of the city that is already attracting important firms and enterprises.
Land Policy Issues
The issue of scale relates intrinsically to the role of urban land, which makes one ask if land (including its value, uses, ownership and other factors) should be considered a key variable in the design and management of large-scale urban operations, since the feasibility and success of these projects are often associated with the internalization of formidable externalities often reflected in the cost and management of the land.
Projects to restore historic centers offer important lessons to be considered here. We can compare the cases of Old Havana, where land ownership is completely in the hands of the state, which has permitted certain activities to expand, and Lima, where land ownership is divided among many private owners and public sector agencies, adding to the difficulties in completing an ongoing restoration project. Even though Old Havana has received important financial cooperation from Europe and Lima has a $37 million loan from the Inter-American Development Bank, the main challenge is to promote private investment while also maintaining programs of social and economic assistance for the local residents. Both cities have created special units for the management of these projects, which constitutes an interesting commentary on institutional modernization.
The Role of the State
The scale, the time dimension and the role of land in large urban projects lead us to consider the role of the state and public investment. While urban operations on a large scale are not new in Latin American cities, their present conditions have been affected radically by economic changes, political crises and substantial modifications in the role of the state in general. These conditions make the execution of urban projects, as part of the process of long-term urban development, a source of contradictions with the generally short tenure of municipal governments and the limits of their territorial claims. We must also consider the differences in regulatory competencies between central governments and local municipalities, and the differences between public entities and private institutions or local community organizations, which often reflect conflicting interests due the decentralization and privatization processes being promoted simultaneously in many countries.
Two large projects related to transportation infrastructure are examples of local situations that led to very different results. One was the transformation of the old abandoned Cerrillos airport in Santiago, Chile, and the other was a project for a new airport for Mexico City in Texcoco, an area known as ejido land occupied by peasants and their descendants. In the first case, the active participation of interested groups is expanding the recuperation process of a zone of the city that does not have quality urban facilities. A total investment of $36 million from the public sector and $975 million from the private sector is supporting the construction of malls, facilities for education, health and recreation, and housing for the neighborhood. In Mexico serious conflicts between state interests and community rights to the land had caused social unrest and even the kidnapping of public officials. As a result, the federal government has recently withdrawn from the Texcoco project, assuming huge political and economic costs for this decision.
Segregation and Exclusion
Many planners and practitioners have doubts about the feasibility of large projects in poor countries and cities because of the distortions that their execution could cause on future development, in particular the reinforcing tendencies of segregation and social exclusiveness. The diminishing capacity of the state to look for new alternatives for financing socially beneficial projects through private capital, principally from international sources, adds to the doubts about their success. Many large-scale projects are seen as the only alternative or the unavoidable cost that the city or society has to pay to generate an attractive environment in a context of growing competition among cities for a limited number of external investors.
A key matter with respect to the use of public space generated by these projects is to avoid segregation of space and people. Special attention must be given to protect the inhabitants of the zones where the large urban projects are developed from the negative consequences of gentrification. This is without a doubt one of the most difficult aspects of large urban projects. Table 1 shows the most important aspects and the principal challenges that arise from an analysis of the large urban projects. Effectively, the integration of projects of this scope calls for a vision of the city that avoids the creation of islands of modernity isolated in the middle of poor areas, which would contribute to the process called the dualism of the city, or the generation of new exclusive urban centers.
Table 1: Aspects and Challenges of Large Urban Projects
| Aspects | Challenges |
|---|---|
| Urban grid | Integrate the project into the existing city fabric |
| Planning process | Design the project to be compatible with the established approach to city planning strategies |
| Urbanistic norms and regulations | Avoid the creation of norms giving privileges of exclusiveness to the project |
| Stakeholders | Incorporate all participants involved directly, in particular the not so easily identifiable groups indirectly affected by these projects |
| Financing | Establish innovative public and private partnerships |
| Social, economic and urban impacts | Develop effective ways to measure and assess various types of impacts and ways to mitigate the negative effects |
Two cases in different political-economic contexts help us reflect about this matter. One is the El Recreo project, planned by Metrovivienda, in Bogotá. Although presenting innovative proposals about the use and management of the land in a large project for popular housing, the project has not been able to guarantee the integration of social groups with different income levels. In the Corredor Sur area of Panama City large zones are being planned for the construction of residences, but the result again serves primarily medium- and high-income sectors. Thus in both a decentralized and a centralized country the general norms that provoke residential segregation cannot seem to prevent negative consequences for the poorest sectors of society.
In view of all this, large urban projects should not be seen as an alternative approach to obsolete plans or rigid norms like zoning. They could instead be presented as a kind of intermediate-scale planning, as an integrated approach that addresses the needs of the whole city and avoids physical and social separations and the creation of norms that permit exclusive privileges. Only in this way can large-scale projects take their place as new instruments for urban planning. The positive effects of specific elements such as the quality of architecture and urban design are valuable in these projects if they operate as a benchmark and are distributed with equity throughout the city.
Public Benefits
Large-scale projects are public projects by the nature of their importance and impact, but that does not mean they are the total property of the state. Nevertheless, the complexity of the participant networks involved directly or indirectly, the variety of interests and the innumerable contradictions inherent in large projects require a leading management role by the public sector. The territorial scale of these operations especially depends on the support of the municipal governments, which in Latin America often lack the technical resources to manage such projects. Local support can guarantee a reduction of negative externalities and the involvement of weaker participants, generally local actors, through a more just distribution of the benefits, where the regulation of the use and taxation of the land is a key issue. Such is the intention of the Municipality of Santo Andre in Sao Paulo in the design of the extraordinarily complex Tamanduatehy project. It involves the reuse of an enormous tract of land previously occupied by railroad facilities and neighboring industrial plants that fled this once vigorous industrial belt of Sao Paulo to relocate in the hinterland. The project involves establishing a viable locus of new activities, mostly services and high-tech industries, capable of replacing the economic base of that region.
Beyond creating and marketing the image of the project, it is important to achieve social legitimacy through a combination of public and private partners engaged in joint ventures, the sale or renting of urban land, compensation for direct private investment, regulation, or even public recovery (or recapture) of costs and/or of unearned land value increments. Active public management is also necessary, since the development of the city implies common properties and benefits, not only economic interests. Analysis of economic and financial costs, and opportunity costs, are also important to avoid the failure of these projects.
Conclusions
The basic components in the pre-operational stage of executing large urban projects can be summarized as follows:
An adequate analysis of the trade-offs (economic, political, social, environmental, and others) is indispensable, even if it is clear that the complex problems of the contemporary city cannot be solved with large interventions alone. It is important to reiterate that more importance must be given to the institutionalization and legitimacy of the final plans and agreements than simply the application of legal norms.
The presentations and discussions at the course on “Large Urban Projects” show that the matter of urban land strongly underlies all the aspects and challenges described above. Land in this type of project presents a huge complexity and offers a great opportunity; the challenge is how to navigate between the interests and conflicts when there are many owners and stakeholders of the land. It is necessary to combat the temptation to believe that modern urban planning is the sum of large projects. Nevertheless, these projects can contribute to building a shared image of the city between the inhabitants and the users. This topic clearly has facets that have not been completely explored yet and that need continued collaborative analysis and by academics, policy makers and citizens.
Mario Lungo is executive director of the Office of Planning of the Metropolitan Area of San Salvador (OPAMSS) in El Salvador. He is also a professor and researcher at the Central American University José Simeón Cañas.
References
Borja, Jordi. 1995. Un modelo de transformación urbana. Quito, Peru: Programa de Gestion Urbana.
Carmona, Marisa and Rod Burgess. 2001. Strategic Planning and Urban Projects. Delft: Delft University Press.
Ingallina, Patrizia. 2001. Le Projet Urbain. Paris: Presses Universitaires de France.
Powell, Kenneth. 2000. La transformación de la ciudad. Barcelona: Ediciones Blume.
Arantes, Otilia, Carlos Vainer e Erminia Maricato. 2000. A cidade do pensamento unico. Petrópolis: Editora Vozes.
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Gerrit-Jan Knaap is an economist, professor of urban studies and planning, and executive director of the National Center for Smart Growth Research and Education at the University of Maryland, in College Park. His research interests include the economics and politics of land use planning, the efficacy of economic development instruments, and the impacts of environmental policy. His research in Oregon, Maryland and elsewhere has made him a recognized expert on land use policy and planning. He is the coauthor or editor of several books, including two published by the Lincoln Institute: The Regulated Landscape: Lessons on State Land Use Planning from Oregon (1992); and Land Market Monitoring for Smart Urban Growth (2001).
Land Lines: As director of the National Center for Smart Growth Research and Education, what land policy issues are you addressing now?
Gerrit-Jan Knaap: This Center has been in existence for only three years, but this year it is finally getting established and recognized. In the past year we have been able to pull together a core group of national and international researchers who are now working in three key areas: land use and environment; transportation and public health; and international urban development. The Center is also recruiting a faculty researcher to concentrate on housing and community development.
LL: What are the Center’s most difficult challenges?
GK: Ironically, the Center’s name is a problem. While the phrase “smart growth” is helpful shorthand for describing an approach to land use planning and management, some people identify the term with liberal causes or with former Maryland Governor Parris Glendening or the Clinton-Gore administration. As a result, the phrase has been politicized in a way that causes confusion and polarized reactions. The Center does not support or oppose smart growth; it is just an adjective modifying what we do: research and education.
We have found, however, that it is more difficult to obtain funding for objective research on growth management and planning issues than it is to obtain funding for activities that advocate either for or against smart growth. The Lincoln Institute’s willingness to fund independent, objective, high-quality research in this field fills an important niche.
LL: What are some of the Center’s most significant projects?
GK: We are doing a lot of work to develop quantitative measures of urban form. We are not alone in this enterprise, but we think we’re still a step ahead of other research centers in applying such measures to policy issues. Reid Ewing, a nationally recognized expert on growth management, community development and traffic management, recently joined the staff. He and others, for example, have developed a sprawl index that they use to explore the relationship between sprawl and obesity, which is part of our public health focus.
Yan Song, a former post-doctoral fellow in the Center and now an assistant professor at the University of North Carolina, developed quantitative measures of urban form and used them to explore whether Portland, Oregon, was winning the battle against urban sprawl. She also used them to determine whether characteristics like street network connectivity, residential density, land use mix and pedestrian accessibility to commercial uses were capitalized into property values. Most recently, she has used the measures to classify neighborhoods into clusters with similar design characteristics as a means of classifying the types of neighborhood that are currently being built.
Another major focus of our work is land policy and growth management in the People’s Republic of China. As a result of recent economic growth and reforms, China’s 1.3 billion people are urbanizing at an astonishing rate, creating an unprecedented growth management challenge. The Chinese are struggling to find a way to accommodate urban growth and, at the same time, preserve their ability to feed their people. Though we certainly do not have all the answers, Chinese scholars and public officials are interested in learning from our experiences in confronting and balancing these challenges. Chengri Ding, another member of the Center’s faculty, is leading this work with support from the Lincoln Institute. He and Yan Song are editing a book on the evolution of land and housing markets in China that will be published by the Institute later this year.
Our third major focus area is land market monitoring, which grew out of my work in Oregon. Land market monitoring is based on the idea that urban growth management is partly an inventory problem: too much land can lead to urban sprawl, but too little land may create land and housing price inflation. Maintaining balance requires accurate and timely information about land supplies, development capacity, land and housing prices, natural resource constraints and urban development demands. We have conducted several workshops around the country on land market monitoring, and now we are working with the U.S. Department of Housing and Urban Development (HUD) and the Lincoln Institute to establish a national demonstration project.
LL: How did you develop this concept of land market monitoring?
GK: It started with my dissertation work on the price effects of the urban growth boundary (UGB) in Portland, Oregon. Later, at the University of Illinois, Lew Hopkins and I worked on a project we called, “Does Planning Matter?” We sought to develop planning support systems that not only helped to improve land use decision making, but also helped identify the effects of land use plans and regulations on urban development patterns (Ding, Hopkins and Knaap 1997). Building on this work, I organized a conference at the Lincoln Institute in Cambridge in 2000 and invited a group of leading scholars to present papers on this issue. These papers were published by the Institute in the book Land Market Monitoring for Smart Urban Growth, which was recently translated into Chinese. The idea of measuring development capacity and the need for housing is actually as old as planning itself, but recent advances in GIS technology and digital data bases makes it possible to monitor development capacity on a nearly continuous basis.
LL: How are these ideas being used by planners in the U.S.?
GK: Well, to a large extent, they are not. Typical planning practice in the U.S. still involves the formulation of a comprehensive plan—usually for a 10- to 20-year period—then implementing the plan, and then, after 5 to 10 years, formulating a new plan. With a land market monitoring system it is possible to shorten this cycle considerably. In the extreme, it is conceptually possible to monitor development capacity and urban development trends on a continuous basis and make adjustments as needed. Most planners, however, are not trained to think about growth management issues in this way.
LL: What are the obstacles to using land market monitoring in different locales?
GK: The major obstacles are: (1) the lack of quality data; (2) the lack of intergovernmental cooperation; and (3) the lack of political will to place this issue high on the agenda. The primary problem is not money. To do land market monitoring correctly requires a certain level of resource commitment, but since virtually every local government is developing GIS data and has the necessary technical capacity, it is not difficult to develop an operational monitoring system.
There are some positive examples, however. Monitoring of some kind has been required in Oregon for many years; for this reason, Metro, the regional government for the Portland metropolitan area, has developed an extensive monitoring system (Knaap, Bolen and Seltzer 2003). In its Growing Smart Guidebook, the American Planning Association recommends that any local government that adopts an urban growth boundary also should develop a land monitoring system. Most recently, Maryland Governor Robert L. Ehrlich Jr. signed an executive order that will initiate a pilot program of land market monitoring in five cities and five counties, and I will serve on the task force that oversees that demonstration project.
LL: What are your plans for the future?
GK: We have two demonstration projects under way. In the first, we are working with the Maryland Department of Planning to develop a series of indicators to assess the progress of the state’s Smart Growth program. These indicators will measure development capacity as well as housing starts and prices, acres of land protected from development, vehicle miles traveled, transit ridership and other trends that will help state officials and the public judge the effectiveness of smart growth policies.
Second, we have just completed phase one of a national demonstration project that was jointly funded by HUD, the Federal Highway Administration and the Lincoln Institute. We identified a generic protocol for conducting a development capacity analysis, applied this protocol to 15 counties in Maryland, and held workshops on monitoring in several metropolitan areas around the country. With Zorica Nedovic-Budic, we also conducted an assessment of the capacity of regional governments to use GIS for land use and transportation planning (see http://www.urban.uiuc.edu/faculty/budic/W-metroGIS.htm). We hope to begin the second phase of that project early in 2004 in five selected sites around the country. Phase two will focus first on residential development capacity, then on employment development capacity, then on how to tie together land use forecasting with transportation planning.
We’re also exploring the possibility of setting up a land market monitoring demonstration project in China, in conjunction with the Lincoln Institute’s new China program.
LL: So where does smart growth go next?
GK: What will happen to the expression “smart growth” is difficult to say. Governor Ehrlich has started calling his version of Maryland’s land use program “Priority Places,” but all of the newspapers still refer to his effort as smart growth. So, it remains to be seen whether the phrase becomes part of the national lexicon or fades like the Macarena. There is no doubt, however, that the issues associated with the term “smart growth” will not go away, in Maryland, around the country, or even overseas. We think this Center is now well-positioned to become an important and objective source of information and education on these issues well into the future.
References
Ding, Chengri, Lewis Hopkins and Gerrit Knaap. 1997. Does Planning Matter? Visual Examination of Urban Development Events. Land Lines 9(1): 4-5.
Knaap, Gerrit, Richard Bolen, and Ethan Seltzer. 2003. Metro’s Regional Land Information System: The Virtual Key to Portland’s Growth Management Success. Lincoln Institute Working Paper.
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Land value is determined primarily by external factors, mainly changes that occur in the neighborhood or other parts of the city rather than by direct actions of the landowner. This observation is especially valid for small lots whose form or type of occupancy do not generate sufficiently strong externalities to increase their own value retroactively; that is, a small lot generally does not have a significant impact on those very external factors that could affect its own value. However, large urban projects (grandes proyectos urbanos or GPUs) do influence those factors, and also the value of the land that supports them. Herein lies the essence the Lincoln Institute’s interest in such projects.
We propose two perspectives for analyzing GPUs that complement and contrast with others that formerly predominated in this debate. First, these projects can be a stimulating force for immediate urban change that is capable of affecting land values, and therefore land use, for large areas if not an entire city region. This view is focused more on urban design or urbanism and stresses the study of the physical, esthetic and symbolic dimensions of large urban projects. A second approach, covering the field of regulation, attempts to understand the land value appreciation generated by the implementation and operation of these projects as a potential means for self-support and economic feasibility. It analyzes the role of GPUs in providing a new function for certain areas of the city. Both perspectives require a more holistic understanding that includes the diversity and levels of complexity of the projects, their relation to the city plan, the type of regulatory framework they require, the role of the public and private sectors in managing and financing them, land taxation and fiscal policies, and other factors.
These large projects are not new to Latin America. In the early twentieth century, many cities were impacted by programs that used public-private management arrangements, including outside players (national and international) and complex financial structures. Some projects had the potential to trigger urban processes capable of transforming their surroundings or even the city as a whole, as well as accentuating the preexisting socio-spatial polarization. Often the projects were layered over existing regulations, contributing to questions about the urban planning strategies in force at the time. Large urban developers and utility companies (English, Canadian, French and others) coordinated the provision of services with complex real estate development operations in almost all the major cities of Latin America.
Today large projects attempt to intervene in especially sensitive places to reorient urban processes and create new urban identities on a symbolic level. They also aim to create new economic areas (sometimes territorial enclaves) able to foster an environment protected from urban poverty and violence, and more favorable to domestic or international private investment. When describing the motives that justify these programs, the rhetoric focuses on their instrumental role in strategic planning, their alleged contribution to urban productivity, and their effectiveness in boosting their intercity competitive position.
In a context marked by transformations due to globalization, economic reforms, deregulation and the introduction of a new focus on urban management, it is not surprising that these programs have been the subject of much controversy. Their scale and complexity often spur new social movements; redefine economic opportunities; put into question urban development regulatory frameworks and land use rules; strain local finances; and expand political arenas, thus altering the roles of urban stakeholders. An additional complication is the long time frame for executing large urban projects, which usually exceeds the terms of municipal governments and the limits of their territorial authority. This reality presents additional management challenges and formidable dilemmas within the public and academic debate.
The Lincoln Institute’s contribution to this debate is to underscore the land component in the structure of these large projects, specifically the processes associated with urban land management and the mechanisms for land value capture or the mobilization of land value increments for the benefit of the community. This article is part of a broader, ongoing effort to systematize recent Latin American experience with GPUs and to discuss the relevant aspects.
A Wide Range of Projects
As in other parts of the world, large urban projects in Latin America comprise a wide range of activities: restoration of historic downtown areas (Old Havana or Lima); renovation of neglected downtown areas (São Paulo or Montevideo); redevelopment of ports and waterfronts (Puerto Madero in Buenos Aires or Ribera Norte in Concepción, Chile); reuse of old airports or industrial zones (the Tamanduatehy artery in Santo Andre, Brazil, or the Cerrillos airport in Santiago, Chile); expansion zones (Santa Fé, Mexico, or the former Panama Canal zone); residential or neighborhood improvement projects (Nuevo Usme in Bogotá or Favela Bairro in Rio de Janeiro); and so on.
Land management is a key component in all of these projects, and it presents diverse sets of conditions (Lungo 2004; forthcoming). One common trait is that the projects are managed by a government authority as part of a city project or plan, even though they enjoy private participation in several respects. Thus exclusively private programs, such as shopping centers and gated communities, are a different category of development project not included in this discussion.
Scale and Complexity
The minimum threshold of scale, in terms of surface area or amount of financial investment, for a project to meet the GPU criteria depends on the size of the city, its economy, social structure and other factors, all of which help define the complexity of the project. In Latin America projects often combine large scale and a complex set of players associated with key roles in land policy and management, including various levels of government (national, provincial and municipal), private entities and community leaders from the affected area. Even relatively small upgrading projects are often formidably complex with regard to the land readjustment component.
There is obviously a huge difference between a project proposed by one or a few owners over a large area (such as ParLatino, an abandoned industrial site in São Paulo) and a project involving the cooperation of many owners of small areas. The latter requires a complex series of actions capable of generating synergies or sufficient external economies to make each action economically viable. Most projects fall between the two extremes. They often involve the prior acquisition of rights over smaller parcels by a few agents in order to centralize control over the type and management of the development.
The key to analysis and design of GPUs in Latin America lies in the ability of the institutional organization in charge of project management to incorporate and coordinate scale and complexity appropriately. Governmental corporations have been created in some cases, but they operate autonomously (as in Puerto Madero) or as special public agencies attached to the central or municipal governments (as in the housing program being developed in the city of Rosario, Argentina, or the Nuevo Usme program in Bogotá). The case of the failed project to build the new Mexico City airport demonstrates the negative consequences of not correctly defining this fundamental aspect of GPUs.
Relationship of GPUs to the City Plan
What is the point of developing GPUs when the city has no comprehensive urban development plan or socially shared vision? It is possible to find situations where execution of GPUs may stimulate, enhance or strengthen the city plan, but in practice many such projects are established without any plan. One of the main criticisms aimed at GPUs is that they become instruments for excluding citizen participation in decision making about individual elements of what is expected or supposed to be part of an integrated urban project, as is normally provided for in a city’s master plan or land use plan.
This is an interesting debate within the framework of urban policies in Latin America, since urban planning itself has been criticized as being elitist and exclusionary. Some authors have concluded that urban planning has been one if not the main cause of the excesses of social segregation typical of cities in the region. In this context the recent popularity of GPUs can be seen as a reaction of the elite to redemocratization and participatory urban planning. Others may view GPUs as an advanced (and perverse) form of traditional urban planning; a yielding to the failures or ineffectiveness of urban planning; or even a lesser evil because at least they ensure that something is done in some part of the city.
There are many challenges for GPUs regarding their relationship to a city plan. They can help build a city plan where none exists, alter traditional plans, or do what we might call “navigating through the urban fog” if the former paths are not viable. In any case, land management proves to be a critical factor, both for the plan and for the projects, because it refers to the fundamental role of the regulatory framework covering urban land use and expansion.
Regulatory Framework
The preferred regulatory solution would be a two-part intervention: on one hand, maintaining general regulations for the whole city but changing the conventional criteria to be more flexible in absorbing the constant change taking place in urban environments; and on the other, allowing specific regulations for certain projects but avoiding regulatory frameworks that may contradict the stated goals of the city plan. Urban Operations, a specific and ingenious instrument devised under the Brazilian urban development legislation (Statute of the City Act of 2001), has been used widely to accommodate these dual needs. The city of São Paulo alone has 16 such operations in effect. Another version of this instrument is the so-called “partial planning” provision to readjust large tracts of land, which is included in Colombia’s equally innovative Law 388 of 1997.
Again in practice we see that exceptions are often granted in an apparently arbitrary manner, and regulatory restrictions are frequently ignored. The point is that neither type of regulation is submitted to any assessment of its socioeconomic and environmental value, thus losing a significant portion of its justification. Given the financial and fiscal fragility of cities in Latin America, what prevails is an extremely low capacity for public discussion of the requests made by the proponents of GPUs. The absence of institutional mechanisms that would make these negotiations transparent makes them more venal, insofar as they expose the capacity to discuss other, less prosaic legal challenges.
Public or Private Management and Financing
What is the desirable combination of public and private management of these projects? To guarantee that public management of a large urban project fulfills its function, land use must be monitored and regulated, although the degree to which the control should be exercised, and on which specific components of land ownership rights, is unresolved. Ambiguity in the courts and the uncertainties associated with the development of GPUs often result in public frustration over unanticipated outcomes favoring private interests. The proper balance between effective ex ante (GPU formulation, negotiation and design) and ex post (GPU implementation, management, operation and impacts) controls over land uses and rights is at the heart of the problem. Typically in the Latin American experience with GPUs there is a huge gap between original promises and actual outcomes.
In recent years the management of GPUs has been confused with the utility and feasibility of public-private partnerships, such as those set up in many countries to carry out specific projects or programs. Some stakeholders even propose the possibility of privatizing urban development management in general. If the private sector has complete control over the land, however, GPUs are severely limited in their ability to contribute to socially sustainable urban development, despite the fact that in many cases the projects contribute significant taxes to the city (Polese and Stren 2000).
The preferred public management system should call on the greatest social participation possible and include the private sector in the financing and implementation of these projects. The large urban programs that seem to contribute the most to the development of a city are those based on public management of the land.
Land Value Appreciation
There is consensus around the fact that GPUs generate an appreciation in land value. Differences emerge when we try to assess the real amount of this appreciation, if it is to be redistributed and, if so, how it should be shared and whom it should benefit, both in social and territorial terms. Again we have the public-private conundrum, wherein this redistribution formula often leads to the appropriation of public resources by the private sector.
The appreciation of land value as a resource that can be mobilized for self-financing the GPU or transferred to other areas of the city could be a way to measure whether or not public management of these projects is a success. However, we rarely have an acceptable estimate of this land value increment. Even in the Puerto Madero project in Buenos Aires, which is considered to be a success, to date there is no evaluation of the land value increment associated with either the properties within the project itself or those in neighboring areas. As a result, the discussion of possible redistribution has not gone beyond a few educated guesses.
GPUs conceived as instruments for achieving certain strategic urban goals are generally registered as successes when they are executed according to plan. The question regarding to what extent these goals were actually reached is not fully answered, and it is often conveniently forgotten. The hypothesis that best seems to fit Latin American experiences with GPUs is that the apparent lack of interest in goals has little to do with any technical inability to make the source of the increased value transparent. Rather, this inattention comes from the need to hide the role of public management in facilitating the private sector’s capture of the land value increment in general, if not its capture of public resources used to develop the construction project itself.
We are not feigning ignorance of or trying to minimize the difficulties in advancing knowledge about how land value appreciation is formed and in measuring its size and circulation. Indeed, there are many technical obstacles to overcome when faced with complicated land rights, the vicissitudes or permanent flaws in cadastres and property registers, and the lack of an historical series of geo-referenced real estate values. Even the smallest plan must distinguish between the appreciation generated by the project itself and that generated by urban externalities that almost always exist despite the scale of the project, the different sources and rates of appreciation, and so forth. Some encouraging work has been done on measuring and evaluating the land value increment associated with development, but technical obstacles seem to be less relevant than the lack of political interest in knowing how these projects are being managed.
When land value increments are created, they are usually distributed in the immediate project area or nearby. This principle is based on the need to finance a specific project within the area, to offset certain negative impacts, or to implement actions such as relocating precarious housing sited on the land or its surroundings that may detract from the image of the new project. Given the socioeconomic conditions found in the typical Latin American city, it is not hard to see that the preferred use of the captured value is to earmark it for projects of a social nature in other parts of the city, such as housing complexes. In fact a significant part of the generated land value increment results exactly from the removal of negative externalities produced by the presence of low-income families in the area. Needless to say, this strategy raises conflicting opinions.
There is certainly a need to devise better legislation and instruments to overcome the trade-off between socially mobilized land value increment and gentrification through displacement. Despite the lack of hard empirical studies, there are reasons to believe that a broader understanding of the impacts of these projects will show that some of the compensatory intracity transfers may actually prove to be counterproductive. For example, the resulting higher land price differences and social residential segregation may involve higher social costs that will need to be addressed by additional public resources in the future (Smolka and Furtado 2001).
Positive and Negative Impacts
On the other hand, the negative impacts caused by GPUs often obscure the varied positive impacts. The challenge is how to reduce the negative impacts produced by this type of urban intervention. It soon becomes clear, whether directly or indirectly, that the role of land management is critical to understanding the effects of large interventions in urban development, planning, regulation, socio-spatial segregation, and the urban environment and culture. Scale and complexity have a role as well, depending on the type of impact. For example, scale is more relevant to environmental and urban development impacts, while complexity is more critical in terms of social impact and urban policy.
As already mentioned, the gentrification that these projects generally produce encourages the displacement of the existing, usually poor, inhabitants from the new project area. However, gentrification is a complex phenomenon that requires further analysis of its own negative aspects, as well as how it could help to raise living standards. It could be more useful to move on from simple mitigation of unwanted negative impacts to better management of the processes that create these risks.
Any GPU can have positive or negative effects, depending on the way urban development is managed, the role of the public sector, and the existing level of citizen participation. We have emphasized that one of the central issues is management of the land and of the land value increment associated with these projects. Large urban projects can not be analyzed in isolation from the entire development of the city. Likewise, the land component must be evaluated with respect to the combination of scale and complexity that is appropriate for each project.
Mario Lungo is a professor and researcher at the Central American University (UCA José Simeón Cañas) in San Salvador, El Salvador. He formerly served as executive director of the Office of Planning for the Metropolitan Area of San Salvador.
Martim O. Smolka is senior fellow of the Lincoln Institute of Land Policy, cochairman of the Department of International Studies and director of the Program on Latin America and the Caribbean.
References
Lungo, Mario, ed. 2004. Grandes proyectos urbanos (Large urban projects). San Salvador: Universidad Centroamericana José Simeón Cañas.
Lungo, Mario (forthcoming). Grandes proyectos urbanos. Una revisión de casos latinoamericanos (Large urban projects: A review of Latin American cases). San Salvador: Universidad Centroamericana José Simeón Cañas.
Smolka, Martim and Fernanda Furtado. 2001. Recuperación de plusvalías en América Latina (Value capture in Latin America). Santiago, Chile: EURE Libros.
Polese, Mario and Richard Stren. 2000. The social sustainability of cities. Toronto: University of Toronto Press.
Large-scale urban redevelopment projects (termed grandes projectos urbanos or GPUs in Spanish) raise many questions about the impacts of subsequent urban development induced by the intervention. GPUs are characterized by an impact in a significant part of the city, often with the use of some new fiscal or regulatory instruments and the involvement of a large network of agents and institutions. These projects are expected to affect land prices, recycle existing or create new infrastructure and facilities, and attract other new buildings.
GPUs as an urban policy instrument have been the object of considerable controversy and debate throughout Latin America. It is often argued that they promote social exclusion and gentrification, have limited effects in stimulating real estate activities, and require large (sometimes hidden) public subsidies that often draw fiscal resources from other urban needs. In spite of their increasing popularity in Latin America, there is little empirical evidence to support these criticisms.
This article presents the case of a GPU introduced in São Paulo, Brazil, in 1996 as an “urban operation” to redevelop a middle-income area of mostly single-family homes that was to be traversed by the extension of the Faria Lima Avenue. The project is known as the Faria Lima Urban Operation Consortium (OUCFL). We examine economic principles that affect the fiscal performance of the project and its opportunity for value capture, evaluate changes in residential density, and analyze changes in income distribution and ownership structure. Finally, we offer some policy suggestions on how and when to use this kind of instrument based on these assessments.
What is an Urban Operation?
An urban operation is a legal instrument that seeks to provide local governments with the power to undertake interventions related to urbanistic and city planning improvements in association with the private sector. It identifies a particular area within the city that has the potential to attract private real estate investments to benefit the city as a whole. The proper city planning indexes (i.e., zoning and other regulations on construction coefficients, rates of occupation, and land uses) are redefined in accordance with a master plan, and investments are made in new or recycled infrastructure.
An urban operation allows the municipality to capture (through negotiated or mandatory means) the land value increments associated with the subsequent land use changes. In contrast to other value capture instruments, these funds are earmarked or internalized within the perimeter of the project to be shared between government and the private sector for both investments in urban infrastructure and subsidies to private real estate investments to support the project itself.
Each urban operation in Brazil is proposed by the executive and approved by the legislative branch of the jurisdiction. In the case of São Paulo, this authority was created in the Lei Organica Municipal (Constitution of the City) in 1990, which was later inserted in the new Brazilian urban development law (Statute of the City of 2001). The first proposed projects were the Operation Anhangabaú (subsequently expanded as a part of the Downtown Operation and renamed Center Operation) and Água Branca, followed by the Água Espraiada and Faria Lima operations. After the approval of the city’s new Master Plan in 2001, nine other urban operations were generated. These thirteen projects are expected to affect 30 to 40 percent of the buildable area of the City of São Paulo.
Financing Faria Lima
The Faria Lima urban operation (OUCFL) was proposed and approved in 1995 with the aim of obtaining private resources to fund the public investments necessary to purchase land and install infrastructure in order to extend Faria Lima Avenue. These costs were deemed at the time to be approximately US$150 million, two-thirds for land acquisitions and one-third for the avenue itself. The project was heavily contested by many stakeholders on grounds ranging from the source of the funds (i.e., advanced out of the local budget through new debt) to neighborhood concerns (one of which managed to keep the floor-area-ratios [FARs] unchanged and legally excluded from the OUCFL zoning) and technical design issues.
Technical studies carried out at the time indicated that it would be possible to take advantage of an additional potential 2,250,000 square meters beyond what was already permitted by the city’s zoning legislation, and the FARs were changed accordingly. These additional building rights were granted against a payment of a minimum of 50 percent of their market value using the existing “Solo-Criado” (Selling of Building Rights) instrument. OUCFL aroused great interest on the part of real estate entrepreneurs. This instrument nevertheless was also questioned for its lack of transparency, its project by project approach, and the arbitrariness in the way relevant prices were established and then used to calculate the value of the additional building rights.
By August 2003 a total of 939,592 square meters, or nearly 42 percent of the available total of these 2,250,000 square meters, had already been licensed. More than 115 real estate projects were approved, including nearly 40 percent commercial buildings and 60 percent high-quality residential buildings. Nevertheless, the resources (approximately US$280 million) obtained from these approved projects had not fully compensated for the expenditures (US$350 million, including principal plus interest) associated with the expansion of the avenue, considering the high interest rates prevailing in Brazil for the nearly eight years since the realization of expenditures. Thus, about 80 percent of the cost (albeit more than anticipated) has been recovered through the Selling of Building Rights process. Since July 2004 the compensation for these advance funds was obtained through an ingenious new value capture mechanism known as CEPAC, an acronym for a Certificate of Additional Potential of Construction. One CEPAC represents one square meter.
The Introduction of CEPACs
Although CEPACs were defined in Brazil’s Statute of the City of 2001, they were not approved by the CVM (Brazilian equivalent to the U.S. Security and Exchange Commission) as freely tradable in the Brazilian Stock Exchange until December 2003. The regulation establishes that the price of each certificate is defined by public auction and that the corresponding square meters of building rights (which also include use changes and occupation rates) expressed in each certificate may be executed at any time. The regulation also states that new batches of certificates can be issued (and sold through auction) only upon confirmation that the resources captured by the previous sale have been effectively earmarked to the project. To ensure this designated use, the revenues are deposited in a special account, not in the municipal treasury. From the perspective of the private investors this designation ensures the acceptability of this value capture instrument at its own valorization. By issuing a lower number of certificates than potential building rights—that is by managing their scarcity—the public sector may benefit from the valorization and thus be able to capture value “ex-ante” (Afonso 2004, 39).
The final approval of CEPACs for OUCFL and all the necessary steps for launching them in the financial market occurred in mid-2004, and the first auction at the end of December 2004 generated nearly R$10 million (about US$4 million), corresponding to the sale of approximately 9,000 CEPACs out of an authorized stock of 650,000 square meters. The OUCFL certificates were sold at a face value of R$1,100 (about US$450) per square meter with no observed premium pricing as a result of the bidding process.
This situation contrasts with that of the Água Espraiada urban operation, which was expected to be fully funded by CEPACs from its start. In its third auction, the certificates were already capturing R$370 per certificate against a face value of R$300 set for this operation. A more recent auction in Água Espraiada sold 56,000 CEPACs and captured R$21 million ($US9.5 million), reflecting a certificate price of R$371. This pricing contrast reflects the different original face values in the two projects. In the case of OUCFL developers bought (and stocked) building rights in advance, to benefit from the more flexible rules prior to the CVM approvals. The certificate price in Faria Lima started at more than R$1,100 because it is a more valued area. In Água Espraiada developers were willing to pay more than the original face value because the certificates were less expensive and thus in greater demand.
Land Price Implications
The prices of vacant land and developed areas experienced a considerable increase in some blocks within the perimeter of OUCFL during the 1990s, but decreased in other blocks. Yet, the average square meter price of new real estate development fell throughout the Metropolitan Region of São Paulo (RMSP) in all price bands, when comparing the average price from 1991 to 1996 with those of 1996 to 2000.
After controlling for a number of attributes associated with the changing character of the developments and their location, the price estimations showed an unequivocal relative increase after the operation was launched. The average price per square meter within the OUCFL perimeter increased from R$1.68 thousand in the 1991–1996 period to R$1.92 thousand in the 1996–2001 period, a 14 percent increase, while prices in RMSP decreased from R$1.21 thousand to R$1.06 thousand, a 12 percent decrease in the same period (R$1.95/US$1.00 in December 2000). Thus, the price per square meter in OUCFL was higher than that of RMSP by around 26 percent. The price per square meter in OUCFL was 38 percent higher than the average price in the RMSP in 1991–1996, and it increased to 81 percent higher in 1996–2001.
Was this increase captured by the municipality as anticipated? Considering that the cost of construction in average is around R$1,000 per square meter, the 2004 auction (the only one so far) captured almost all of the value added at current prices. The previous pre-CEPAC system captured about 50 percent or more, depending on the capacity and success of municipal negotiators, and the correctness of the reference price. CEPAC now changes this percentage and the face value of the instrument may capture all the value increment or even more, depending on the relation of this face value to market prices, and on the results of future auctions. Comparing a redevelopment project financed totally by construction bonds (like CEPACs) and one financed totally with general property taxes, there is no doubt that the former is less regressive than the latter. Even with a progressive property tax, with rates increasing according to values, part of the costs would be paid by poorer households.
This evidence that about 80 percent of the total cost of the project has already been recovered, combined with the auctioning of the remaining building rights through CEPACs and the impact of the property appreciation on the current property tax revenues, indicates that the project should not only pay its own way but actually generate a fiscal surplus for the city as a whole over the next five or seven years.
In effect, the changes caused by substituting older single-family houses with new residential and commercial buildings resulted in a substantial change in property tax collection in the OUCFL area. Many lots and even entire blocks had been occupied by single- and two-story houses constructed since the 1950s. Many of these structures were eligible for a discount coefficient for obsolescence of up to 30 percent of the property tax. They were replaced with new, taller and higher-quality buildings for which the discount was null. Our estimates indicate that the differences in property tax collection by square meters constructed may have increased by at least 2.7 times and up to 4.4 times. That is, the average property tax per square meter increased to a minimum of R$588.50 up to R$802.50 from R$220.95 if the house was 25 years old, or from R$179.70 if the house was 30 years old.
Social Implications
The OUCFL case offers a unique opportunity to quantify changes in resident characteristics before and after the intervention, since data at the census track level is available for 1991 and 2000, and the intervention began in 1996. Our analysis of gentrification and displacement of poorer residents mainly confirms the findings of Ramalho and Meyer (2004) that the average income has increased relatively in most of the blocks inside the OUCFL perimeter. By Brazilian standards, the upper-middle class was displaced from the region by the richest 5 percent of households in the metropolitan area. The census data also showed that residential density fell between 1991 and 2000, from 27 to 22 residences per hectare, although these figures may be distorted because they reflect the ratio of total residences in the entire area, not an average of the ratios per plot where land use was converted.
The data from 1991 indicated that the population was already leaving the OUCFL area before the approval of the urban operation, but this exodus intensified after 1996, generating vacant plots in the process of site-assembly to accommodate the new high-rise developments. At the same time, building density increased. The average number of floors per new building in the area increased from 12.6 in the 1985–1995 period to 16.7 in the 1996–2001 period. The number of housing units per building increased from 37.1 to 79.6 over the same periods.
This apparent contradiction between decreased residential density and increased numbers of housing units is explained in part by the construction of commercial buildings that replaced many single-family residencies on small and average-sized lots. OUCFL induced considerable real estate concentration as the new commercial and residential buildings replaced the houses and required greater land areas for high-class architectural projects. The 115 projects approved between 1995 and August 2003 that requested increases in the utilization coefficients required a total of 657 lots, or an average of 5.7 lots per project.
The combination of the increase in income level and the reduction in household density indicates that the gentrification process advanced in and around the OUCFL region during the 1990s. Nevertheless, this is not a classic case of gentrification, where poor families are driven out of an area due to various socioeconomic pressures. In this case mostly upper-middle classes were displaced. Except for the small nucleus of remaining favelados (Favela Coliseu), the region was already occupied by people belonging to the richest segments of society.
Some Policy Observations
This article contributes to the debate about the social management of land valuation by furnishing real data assessments and economic elements. These elements have been missing from most analysis, and we believe that this gap in the literature has contributed to an incomplete interpretation of the implications of an urban operation and to mistaken public policy recommendations.
Our conclusion is that the CEPAC funding mechanism itself does not increase the regressive characteristic of urban operations, since without those building rights bonds all the investment in redevelopment would be financed by general taxes. If the OUCFL project were inadequate in terms of income distribution, it would have been even worse without the value capture mechanism. Instead, CEPAC and the value capture mechanism used previously offered two desirable characteristics of any public investment: charging the new landowners is at least neutral in terms of income distribution; and the primary beneficiaries end up paying for the project.
Furthermore, the urban operation mechanism offers incentives for redevelopment. Given that most projects increase land prices and drive out the poor from the region, it would be better to invest the entire municipal budget in small-scale projects. This is the opposite of what happened with the redevelopment of the adjacent high-end Berrini area where developers decided how to concentrate their investment, resulting in even more income concentration than in the OUCFL area. Because of inaction by policy makers in that case, the municipality did not capture any value from Berrini, yet paid the entire cost of infrastructure.
The use of building rights bonds may diminish the regressive aspect of land development, but to make a project truly progressive requires attention on the expense side, by funding all the investment through instruments like CEPACs. The main limitation on distributing benefits to the poor is that the law establishes that all funds collected through value capture (CEPACs or other instruments) must be invested within the perimeter of the intervention. One way to make these interventions more progressive is to invest in activities that will furnish spillovers to the poor, such as public transit, education, and health. Moreover the relevant legislation allows the administration to select an area inside the perimeter of an urban operation and declare it a zone of special social interest (ZEIS) where lots can be used only for low-income social housing.
Another alternative is to establish social housing areas within the perimeter of the urban operation. By subsidizing low-income housing with money from developers and new landowners, there would be no distortion in prices outside of the housing industry. The subsidy results from segmenting the market and transferring the extra rent to poor households. This is real social management of land valuation.
Ciro Biderman is affiliated with the Center for Studies of Politics and Economics of the Public Sector (Cepesp) at the Economic and Business School at the Getúlio Vargas Foundation in São Paulo, Brazil. He is a visiting fellow in international development and regional planning in the Department of Urban Studies and Planning at Massachusetts Institute of Technology, Cambridge.
Paulo Sandroni is an economist and professor at the Economic and Business School at the Getúlio Vargas Foundation.
Martim O. Smolka is senior fellow and director of the Lincoln Institute’s Program on Latin America and the Caribbean.
Photograph Credit: wsfurlan via iStock / Getty Images Plus.
References
(These publications are available only in Portuguese.)
Afonso, Luis Carlos Fernandes. 2004. Financiamento eh desafio para governantes (Financing is a challenge to government). Teoria ane Debate No. 58, Maio-Junho: 36–39.
Ramalho, T., e R.M.P. Meyer. 2004. O impacto da Operação Urbana Faria Lima no uso residencial: Dinâmicas de transformação (The impact of the Faria Lima Urban Operation on residential use: Transformation dynamics). Mimeo. São Paulo: Lume/FAUUSP.
Biderman, Ciro, e Paulo Sandroni. 2005. Avaliação do impacto das grandes intervenções urbanas nos precos dos imoveis do entorno: O caso da Operação Urbana Consorciada Faria Lima (Evaluation of property price impacts near large-scale urban interventions: The case of Faria Lima Urban Operation Consortium). Lincoln Institute of Land Policy Research Report (April).
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Harmful impacts of sprawl in terms of air and water pollution, waste of energy and time, traffic congestion and highway accidents, lack of affordable housing, increased flooding, and loss of biodiversity have been widely documented (Platt 2004, ch. 6). Also, the fiscal impacts of sprawl on local communities have been evaluated by researchers at the Brookings Institution, the Lincoln Institute of Land Policy, and elsewhere.
Slaying the “beast of sprawl” has been the Holy Grail of planners and land use lawyers for decades, stimulating the development of new tools like planned unit development (PUD), cluster zoning, subdivision exactions, preferential taxation of farm and forest land, transfer of development rights (TDR), state land use planning, and growth management. Reflecting the antisprawl fervor of the 1970s, a prominent policy report titled The Use of Land euphorically declared:
“There is a new mood in America. Increasingly, citizens are asking what urban growth will add to the quality of their lives. They are questioning the way relatively unconstrained, piecemeal urbanization is changing their communities and are rebelling against the traditional processes of government and the marketplace.” (Rockefeller Brothers Fund 1973, 33)
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Canfei He earned his Ph.D. degree in geography from Arizona State University in 2001, and then moved to the University of Memphis, Tennessee, where he taught as an assistant professor. In August 2003, he returned to China as an associate professor in Peking University’s College of Urban and Environmental Sciences, and was promoted to full professor in 2009. In addition to his academic duties at Peking University, Dr. He has served as associate director of the Peking University–Lincoln Institute Center for Urban Development and Land Policy since 2007. He is also the associate director of the Economic Geography Specialty Group of the China Geographical Society.
Dr. He’s research interests include multinational corporations, industrial location and spatial clustering of firms, and energy and the environment in China. The World Bank invited him to write a background paper on industrial agglomeration in China for the World Development Report 2009: Reshaping Global Economic Geography.
Dr. He has authored four academic books and his work is published widely in English journals including Regional Studies, Urban Studies, Annals of Regional Science, International Migration Review, Eurasian Geography and Economics, Post-Communist Economies, and China & the World Economy. Dr. He also serves on the editorial board of three journals: Eurasian Geography and Economics, International Urban Planning, and China Regional Economics.
Land Lines: How did you become associated with the Lincoln Institute of Land Policy and its programs in China?
Canfei He: I learned about the activities of the Lincoln Institute of Land Policy’s recently established China Program from one of my colleagues at Peking University in 2003soon after I returned from the United States. At that time, the Lincoln Institute was working in China on a number of specific programs, and I became involved in several associated research projects.
My official relationship with the Institute began with the establishment of the Peking University–Lincoln Institute Center for Urban Development and Land Policy (PLC) in October 2007. The Institute had been exploring a more long-term partnership with Peking University for some time, and as those discussions progressed, my previous contacts offered opportunities for me to serve as a liaison between the two institutions. I was nominated by Peking University to serve as the associate director with its director, Joyce Yanyun Man, who is also a senior fellow of the Lincoln Institute and director of its Program on the People’s Republic of China. Over the past two years or more, I have been helping to develop the center and coordinate its work with other partners at Peking University, as well as serving as a research fellow of the center.
Land Lines: Why are urban development studies so important in China?
Canfei He: China’s urbanization during the past three decades has been remarkable. As an overwhelmingly rural population in 1978 when reforms began, China is now 45.7 percent urbanized, and the country is projected to be 60 percent urbanized by 2020. This means that China’s cities will need to accommodate more than 100 million new urban residents in this decade.
Market forces, local forces, and global forces are all conspiring to influence the pattern of China’s urbanization and development. Accompanying large-scale and rapid urbanization are revolutionary spatial, structural, industrial, institutional, and environmental changes in an incredibly brief span of time. The multiplicity of these driving forces makes the study of urban development in China both complex and challenging. The next wave of urbanization will have far-reaching implications for the country’s future development, and thus there is a critical need for more high-quality, objective research on the subject.
Land Lines: What are some of the most unusual aspects of urban development in China?
Canfei He: China’s current urban development is quite different institutionally from that of most Western countries. Urbanization in China has occurred at the same time that its economy has become market-oriented, globalized, and decentralized. Whereas most Western urbanization occurred in a period of greater economic isolation, China’s urban development has been directly influenced by international investment and global economic trends.
A second factor is China’s hukou system of personal registration that limits the mobility of its people in part by linking their access to social services to the location of their registration. This system thus presents an institutional barrier that inhibits rural-urban migration despite ongoing reforms.
Regional decentralization is another important aspect that, combined with the state and collective ownership of land, has allowed local governments to play a distinct role in China’s urban development. Land acquisition fees resulting from the sale of multi-decade leases for the use and development of state-owned lands have generated enormous revenues, and have been a critical source of municipal financial resources for urban infrastructure investment. This fee-based revenue, in turn, creates incentives that have promoted even more intense urbanization. On the other hand, the major planning role afforded to local governments in China means that urban planning practice lacks consistency across the country’s diverse regions, and is often hostage to local interest groups.
China is facing increasing global challenges and pressures from many sources including multinational corporations, nongovernmental organizations, global environmental standards, and rising energy prices. These challenges may increase the costs of urban development, but at the same time they may encourage a more sustainable process of urbanization.
Land Lines: How do you approach urban development studies in China through your own research?
Canfei He: China’s urbanization goes hand in hand with its industrialization, and foreign investment has played a significant role in the country’s growth. Urbanization demands labor, land, capital, and technology, as well as supporting institutions. Consequently, there are myriad approaches to studying urban development in China that focus on a particular factor or set of factors.
My own research interests fall within the capital and institutional approaches. Specifically, I investigate industrial agglomeration and foreign direct investment in Chinese cities by highlighting the institutional environment of economic transition. Investigating the elements driving industrial agglomeration in different cities and understanding the locational preferences of foreign and domestic firms are crucial for designing coherent and focused urban planning policies.
For instance, my research on foreign direct investment in real estate development and the locational preferences of international banks found that local market conditions and regional institutions largely determine the locational preferences of multinational services. This type of observation can be of use to planners and politicians in China seeking to foster the growth of the service industry.
With the increasing emphasis on global climate change and acknowledgement of the environmental impacts of China’s first 30 years of reform and development, I am also becoming more involved in research on the environmental impacts of urbanization, including energy consumption and carbon emissions. China has made a commitment to reduce its CO2 emission by 40–45 percent per unit of GDP by 2020, relative to 2005. This means that building low-carbon and energy-efficient cities is another goal on the already lengthy list of challenges that includes servicing, housing, and employing the country’s millions of future urban dwellers.
Land Lines: Given this ongoing international dialogue, how can China best learn from Western urbanization experiences?
Canfei He: We recognize that there is much to learn from the West, including alternative approaches to land policy, housing policy, transportation policy, environmental policy, suburbanization, and the development and planning of megacity regions. China has the benefit of using the West’s experience as a roadmap to help it avoid many of the problems that have arisen in Western cities, such as urban sprawl and gridlock. That economic, political, and geographic diversity offers a wealth of reference points for China’s cities that should not be ignored and can help China avoid problems that have plagued many Western metropolises.
However, it is necessary to research the applicability of particular international experiences, considering the uniqueness of China’s history and culture. Too often analyses of Western urbanization are presented as a blueprint for China, when in fact institutional, economic, and political differences mean that, for one reason or another, those solutions are impractical or unfeasible.
Land Lines: Why is China’s urbanization and urban development so important to the West?
Canfei He: China’s urbanization will be one of the most important dynamics of the twenty-first century, not only for China but also for the West and the rest of the world. Millions of newly affluent consumers and empowered global citizens will exert significant new demands on the world’s finite natural resources in several ways.
First, with the United Nations Millennium Development Goals, China and the world committed themselves to halving the number of people living on less than $1 per day by 2015. Given China’s large number of rural poor, the country’s urbanization and economic development will be instrumental in meeting this important goal, as well as in achieving other goals such as those related to education and improving children’s health. Only cities have the institutional reach and financial capacity to meet these goals on a large scale.
Second, much has been made of the gulf in understanding between China and the West in recent years. Urbanization and urban development will help to integrate China further into the global community, but it may also create more opportunities for cultural friction. The West has a vested interest in seeing that China urbanizes in an atmosphere that encourages openness and intercultural exchange.
Third, history demonstrates that urbanization entails a much greater demand for energy and other resources as living standards rise and as consumption and dietary patterns change. It has become a cliché to say that “as China goes, so goes the world,” but China’s urbanization and its related environmental impacts will have direct implications for the West and the rest of the world.
The recent memory of $150 per barrel of oil shows that this future demand is likely to put great stress on international energy markets and the global economy. This latent demand also has broad implications for China’s CO2 emissions and for global climate change. The United States and China are key to any real hope of keeping the increase in average global temperatures less than 2 degrees Celsius warmer than preindustrial levels, as proposed at the recent climate conference in Copenhagen. Whereas the high level of development in Western countries means that changes happen incrementally, China’s rapid urbanization offers hope to limit the world’s future emissions by making significant changes now as the country develops.
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Climate change is presenting a variety of risks, uncertainties, and difficult choices that communities must learn to address: How should future risk and uncertainty be dealt with in today’s land use decision-making processes? How can stakeholders be involved in decision making in a way that helps to both clarify trade-offs and build consensus on the best ways forward?
Through the joint venture partnership between the Consensus Building Institute (CBI) and the Lincoln Institute of Land Policy, we are helping to answer these questions by drawing on CBI’s own conflict resolution theory and practice, as well as the expertise of other partners on topics such as risk management and scenario planning. We have developed a series of workshops on collaborative approaches to managing risk and uncertainty in decision making. In this article, we reflect on these experiences and the lessons on climate change adaptation to be drawn from them.
As a neutral organization helping to resolve land use disputes of all kinds, CBI has distilled discrete lessons and best practices for planners and others in a position to manage land use disputes (Nolon, Ferguson, and Field 2013). Increasingly though, climate change and its related risks, uncertainties, and complexities are seen as an important part of the broader land use conflict “story.” For example, disputes around locating a facility near a shoreline raise questions about the impact of the facility on the surrounding area and environment, as well as concerns about the likelihood that sea level rise could make the site itself untenable years from now.
Stakeholders inevitably have different perceptions of how certain, imminent, and preventable climate change is, and what risks it will present. Moreover, problems involving climate change are incredibly complex. Understanding the impacts of climate change on the Colorado River, for example, involves thinking through a web of hydrological, legal, social, economic, historical, and other considerations.
In short, confronting climate change involves reconciling different perceptions of risk, moving forward despite a high degree of uncertainty, and finding ways to leave room for adapting and changing course within a complex environment. Our series of workshops has focused on bringing these threads together through the lens of joint fact finding, joint risk management, and collaborative decision making.
Risk Management Workshops
With support from the Lincoln Institute in 2009, CBI developed its first two-day workshop on climate change adaptation, which aimed to bring together expertise in risk management, scenario planning, and consensus building. Our goal was to share best practices in these areas to help land use decision makers consider different ways to approach climate as a key element of uncertainty in planning. CBI’s training partners were Paul Kirshen, a risk management expert, and Stephen Aldrich, president of Bio Economic Research Associates (bio-era), an independent research and consultancy firm, and a longtime scenario planning practitioner.
Together we developed a curriculum that included presentations on each area of expertise, along with an interactive exercise based on the real threats that sea level rise is expected to pose to East Boston, Massachusetts. The course was revised and offered again in 2010 and 2011. In parallel, we developed an online version of the course that is now available on the Lincoln Institute website (see inside back cover).
The main premise of this set of workshops is that climate change should be seen through a risk management lens, and should be dealt with through a process that is inclusive of the broadest possible range of stakeholder attitudes toward the probability of any particular climate change outcome or impact. If stakeholders feel their views and beliefs are treated as legitimate within the process, they are much more likely to participate and to buy into the outcomes.
In addition, scenario planning can help stakeholders approach potential climate change impacts by testing alternative actions against different possible futures to identify actions that best represent a “no regrets” decision. Implicit in this approach is the understanding that it is as foolish to ignore the possible impacts of climate change as it is to spend funds extravagantly to prepare for threats that may not emerge in the future. In this way, scenario planning truly recognizes uncertainty.
CBI began working with the Sonoran Institute in Phoenix, Arizona, in 2011 to bring the workshop to the western United States, with a particular focus on collaborative scenario planning. With Jim Holway, director of the Sonoran Institute’s Western Lands and Communities Program (another Lincoln Institute joint venture partner), and Stephen Aldrich we developed a one-and-a-half day workshop, held in Phoenix in March 2012. It focused on scenario planning methods as a way to move diverse, competing interests forward despite uncertainty, disagreement, and even political polarization, on topics such as climate change, water resource planning, and growth management.
The scenario planning method outlined by Aldrich involves convening a multi-stakeholder group to generate jointly a set of plausible scenarios for the future of a place or problem over a given time horizon. Policy options are measured against the scenarios using a set of criteria that are also generated jointly. Two key distinguishing features of this approach are the involvement of stakeholders throughout the process and the assumption that all of the scenarios should be regarded as equally probable.
This approach to scenario planning is not simply an analysis of alternatives, but an effort to imagine different futures based on what is known today, what is most uncertain, and what are considered the most important drivers of change in the system being considered. The next step is to consider how multiple policy options and other actions fare across those different futures when measured against key criteria such as cost, efficacy, and adaptability.
Throughout the Phoenix workshop we reinforced these concepts and the process steps using an interactive exercise based on the real threats that climate change is expected to pose for water in the southwestern United States. The exercise, called “Planning in Robert County,” presented a fictional Sun Corridor county facing pressure to increase development even as the water supply was projected to decrease due to climate change. The participants used this case study to identify the most important factors for the county, and then translate them into elements of future scenarios by categorizing them as “pre-determined elements,” “major uncertainties,” or “driving forces.”
In the final exercise, participants were given roles that represented common stakeholder groups and interests (e.g., Robert County Board of Commissioners, Robert County Agricultural Association, or Andres River Environmental Organization). They also received a scenarios framework based on two major uncertainties: Would Robert County return to rapid economic growth; and would decreases in water supply due to climate change predicted in the fictional “NRL Climate Change Report” prove correct (figure 1)? The participants had to evaluate a set of water policies using this scenarios framework, while also taking into account the interests and perceptions provided in the role descriptions assigned to them.
The participants, who came from state and local agencies, academia, and the private and NGO sectors, reported that the workshop was extremely helpful for understanding both how collaborative scenario planning works and how it could be useful in their professional contexts. Engaging in a step-by-step simulation of a scenario planning process helped them gain a clearer understanding of what such a process is like, and the benefits and challenges of working with multiple stakeholders.
Many participants were asked to play a role that had very different interests and perceptions of climate change from their own personal or professional situation. This experience provided an opportunity to learn about how other stakeholders might view this type of problem. Several participants asked for more information about the consensus building aspect of process, such as convening the process at the start and conducting an assessment to understand which stakeholders to involve and what issues to address. Many participants agreed that collaborative scenario planning was potentially useful as a dispute resolution tool.
Lessons Learned
The progression and ongoing development of these workshops has helped us distill several lessons on teaching and utilizing collaborative tools for addressing risk, uncertainty, and complexity in decision making.
Clarify Terminology at the Outset
Terms such as consensus building and scenario planning mean different things to different people. Some interpret consensus building as compromise. We often hear from stakeholders concerned that if they participate in a consensus building process they may be forced to give in on their most important interests. When CBI talks about consensus building approaches, however, we mean efforts that aim to meet stakeholders’ key interests in a way that results in an agreement that maximizes joint gains (Susskind, McKearnan, and Thomas-Larmer 1999).
For some people scenario planning suggests a way of working toward a preferred or “official” future, while for others it is a method for forecasting. By contrast, Aldrich’s methodology emphasizes the formulation of a portfolio of plausible futures that are taken to be equally probable, and then tests proposed policy actions and/or strategies within each scenario to uncover which one would perform well across most or all of the scenarios, and thus could be considered the most robust.
Aldrich emphasizes that this method is best utilized for “wicked” problems, which are characterized by high degrees of both uncertainty and complexity. Likewise, he distinguishes expert scenario planning processes from multi-stakeholder approaches. We argue that involving a diverse set of stakeholders throughout the scenario planning process helps ensure that local knowledge is tapped, that diverse points of view are represented, and ultimately that decisions taken will be seen as more legitimate and thus more easily implemented.
Allow Time to Build Comfort with Complexity
Most people don’t spend their days thinking about highly complex and uncertain problems in terms of multiple possible futures. Rather, we are more comfortable with linearity, and with rational decisions based on facts and our own perceptions and preferences. By their nature, though, methods to tackle the complex issue of climate change require a different way of thinking and a certain comfort with the unknown. Thinking about equally plausible futures is new for many people, whether they are participants in a workshop or in a real scenario planning process.
This dynamic was evident at our workshop in Phoenix, for example, when participants in the Robert County exercise were asked to think about how specific water policies–such as transferring existing water rights and increasing water prices–performed in a scenario that was essentially status quo versus a scenario in which water supplies were significantly decreased while economic growth continued apace.
Participants found it difficult to apply one policy across different futures, and to separate their own policy analysis from the interests and priorities of the role they were asked to play. The person whose role required vehement opposition to the idea of paying more for water, for instance, had a hard time recognizing that this policy might work very well in a scenario of scarce water and high growth. This difficulty of separating interests and perceptions from “objective” scenarios translates into real life as well.
To help manage this dynamic, it is important to name the mental shift that is required to handle complexity and uncertainty, recognize that it is not an easy one to make, and give people plenty of time to get used to it. For the purposes of the workshop we found it helpful to regard the exercise of helping the participants measure one policy against four plausible futures as a legitimate and important goal in itself. In the context of real scenario planning, practitioners might find it worthwhile to help stakeholders build their capacity for working with scenarios early in the process.
Leave Time for “Interactive Doing”
Making any workshop interactive is usually helpful, both pedagogically and to keep the audience engaged. Interactivity is especially important for teaching heavily conceptual approaches to handling risk, uncertainty, and complexity. Many people work better when concepts and theory can be tied directly to a relevant reality. Giving people a concrete example or exercise that is familiar, but does not directly reflect their real-life situation, can help bring concepts “down to earth” while leaving room for the participants to experiment with new ideas and points of view (Plumb, Fierman, and Schenk 2011).
Another reason for “interactive doing,” as we came to call it in Phoenix, is to help people see both the challenges and the value of going through a process such as collaborative scenario planning. For example, it may be clear in principle that using major uncertainties to structure future scenarios makes sense, but when it is time to select those uncertainties, this decision making becomes harder than it sounds.
When we asked participants to identify the major uncertainties for Robert County, a strong debate unfolded: Should climate change be treated as a major uncertainty, or is it a predetermined element? Is economic growth a driving force, or is it a major uncertainty? Participants commented afterward that they were surprised at the debate, but found it immensely valuable to see how a group of people could draw such different conclusions based on the same three-page fact pattern.
Building in time to practice the concepts, then, is critical to reinforce ideas, link them to real problems and issues, and illustrate the value of voicing different interests and perceptions. In the context of workshops, we recommend fictionalized but realistic interactive exercises such as Planning in Robert County, which can provide relevant information, reinforce concepts, and encourage participants to take on perspectives to which they may be unaccustomed.
Utilize Consensus Building in Cases of Risk, Uncertainty, and Complexity
The common thread throughout our experience in developing and revising these workshops is the notion that consensus building techniques have an important place in climate change adaptation, and in other decision-making processes that confront risk, uncertainty, and complexity. Engaging representatives of affected stakeholder groups in a meaningful way helps ensure that a range of perspectives and interests are expressed, that local knowledge is utilized, and that the process leads to a robust way forward that is widely viewed as legitimate and credible. Moreover, stakeholder groups can be involved in implementing policies if that is appropriate, especially if a collaborative adaptive management approach is pursued (Islam and Susskind 2012).
Particular consensus building tools and techniques used in collaborative scenario planning and other processes include assessment and process management. At the beginning of a process, an assessment can be done to identify stakeholders and issues to discuss, take account of stakeholders’ capacity to work with scenarios, and design a process for moving forward based on the findings.
Assessments are often done by a neutral party, who begins by conducting confidential interviews with a broad range of stakeholders. The interviews are summarized in an assessment report that synthesizes the main points of view and issues that were voiced, without attributing any particular statement to any particular stakeholder. Stakeholders should be given the opportunity to ensure that their perspective was captured accurately. On the basis of the assessment findings, the facilitator and the convener can decide whether to move forward with a multi-stakeholder process, and if so how the process should unfold.
A facilitator or team of facilitators can also be used to manage the collaborative process, if it is decided that one should move forward. Neutral process managers can help keep the conversation productive and collaborative, and can help the group reach agreement at key points, such as when selecting scenario elements and criteria to assess policy options.
For example, CBI, with support from the Lincoln Institute, recently facilitated a sea level rise summit designed to boost urban coastal resilience in New York City. The facilitators were able to bring together representatives of state and local agencies, advocacy groups, and other stakeholders whose discussions had stalled, and then to enable a conversation that produced concrete next steps for building coastal resilience and a commitment to continue working together. Facilitators can also help groups think through implementation of any policies or agreements that result from the process, including collaborative adaptive management efforts.
Conclusion
In order to make decisions today that relate to the impacts of climate change in the future, CBI’s recent work has reinforced the notion that it is necessary to build capacity for managing risk, uncertainty, and complexity in a way that remains closely connected to the real problems and issues that communities face. Moreover, it is important to engage in decision-making processes that accommodate these challenges, rather than try to make decisions in spite of them, by using methods such as scenario planning and adaptive management. In many situations, however, it is not enough for experts to use these tools without consulting other stakeholders. Often the most robust decisions are those informed by the stakeholders who will be affected by climate change and by the decisions made to try to manage it.
About the Authors
Elizabeth Fierman is an associate at the Consensus Building Institute in Cambridge, Massachusetts, where she works on facilitations and mediations, develops and delivers trainings, and conducts research.
Patrick Field is managing director at the Consensus Building Institute, associate director of the MIT-Harvard Public Disputes Program, and senior fellow at the University of Montana Center Natural Resources and Policy.
Steve Aldrich is the founder of Bio Economic Research Associates LLC (bio-eraTM), an independent research and consulting firm based in Cambridge, Massachusetts, specializing in complex issue analysis at the intersection of our emerging knowledge of biology and the economy.
References
Islam, Shafiqul, and Lawrence Susskind. 2012 (forthcoming). Water diplomacy: A negotiated approach to managing complex water networks. New York: Resources for the Future.
Nolon, Sean, Ona Ferguson, and Patrick Field. 2013 (forthcoming). Land in conflict: Managing and resolving land use disputes. Cambridge, MA: Lincoln Institute of Land Policy.
Plumb, David, Elizabeth Fierman, and Todd Schenk. Role-play simulations and managing climate change risks. Cambridge, MA: Consensus Building Institute. http://cbuilding.org/tools/bpcs/roleplay-simulations-and-managing-climate-change-risks
Susskind, Lawrence, Sarah McKearnan, and Jennifer Thomas-Larmer, eds. 1999. The consensus building handbook: A comprehensive guide to reaching agreement. Thousand Oaks, CA: Sage.
