Broader solution to slum redevelopment

By Candy Tang

With respect to slum redevelopment, it would be more effective to grant residents title to the plots of land the currently occupy and then let market forces work, rather than looking to large scale redevelopment via professional real estate firms.

If we could all agree that one major goal of slum redevelopment is to improve the welfare of its residents, there is no better way than to grant residents the property right as a solution. A great majority of the world’s largest slums such as Orangi Town, Neza-Chalco-Itza and Dharavi are near the heart of the city. They constantly provide low-cost labor to the city but they don’t share in the growth of the city in the form of land appreciation. Assuming liquidity is high in these real estate markets, which is always the case in rapidly developed cities, slum dwellers could monetize the benefits and they are in the best position to decide when to sell and how to distribute the proceeds accordingly.

Large scale redevelopment rarely works because it is a matter of housing, job and freewill. None of this could be compromised. Take Dharavi as an example, with 80% of people self-employed in the slum’s core businesses in leather, recycling, garments and pottery, residents declared they will not agree to any development plan unless they are allotted the same amount of workspace they currently occupy. This ‘city within a city’ is a model of economic efficiency and productivity, a place where most things appear to be broken but everything seems to be working rather nicely.

It is not only economic considerations that lead people to oppose the redevelopment, but cultural considerations as well. The redevelopment proposals may erode the slum dwellers’ traditional ways of life and disrupt communities with rich histories. Its residents have a very clear sense of their own identity; they have hopes and aspirations, and a genuine belief that these are achievable. Real estate developers’ financial models only take into consideration of the cost of rebuilding the house, but not rebuilding the neighborhood. Redevelopers will not and cannot build the social and commercial networks of the self-sufficient economy of the slum.

If a broader goal is to build a slum-free city to increase the competitiveness or appearance of a city, isn’t the idea of “slum-free” a bit self-contradictory? The central problem is not slum, but a missing middle class in the context of extreme inequality and the increasing number of migrants that the city couldn’t properly accommodate anymore.  It therefore requires a broader solution, the key of which is to increase the equal opportunity and social mobility. Besides entitling people with proper rights, it requires constant investment in public goods such as education and a more rigorous champion to root out corruption.

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6 thoughts on “Broader solution to slum redevelopment

  1. Pingback: Most Commented through Friday, March 8th | Sustainable Cities: Urbanization, Infrastructure, and Finance

  2. (This is an interesting comment from someone outside of the class – John)

    Reblogged this on reflections on the everyday and commented:
    While this [post] is certainly a broader perspective on redevelopment than traditional models of eviction and resettlements outside the city, it has some major [drawbacks]. [R]ecent scholarship in the area of informal urbanism focuses on this. Ananya Roy amongst others has written about the short-sightedness of De Soto style land tenure legitimizing schemes. The assumption is that once the “slum-dwellers” have property rights, they will be able to “monetize” the land and reap the benefits.

    First this paradigm totally ignores the asymmetry of information between the “slum-dweller” and a real estate mogul who will be looking to buy the land. It also assumes that because now that the “slum-dweller” has access to some money, it solves the problem of poverty and all the myriad of issues that are linked with it. Further it totally ignores the potential disruption of communities, informal economic networks etc that might result from the dispersion that will likely happen.

  3. I agree with the author that, in theory, granting slum dwellers property rights should allow market force to work, putting the land to its most productive use and allowing former residents to find improved shelter elsewhere — but only in theory. In practice, I believe there are several limitations on the ability of market forces to work properly in this context, two of which I will highlight.

    First, there is likely to be a vast asymmetry of information between the average slum dweller and the real estate developer who is hoping to buy his property. Of course, information asymmetry always exists in negotiations but it is likely to be particularly one sided in a situation like this where level of education is very different between the two parties. (The government could be a force to protect the interests of sellers but, sadly, in countries where slums exist government is often highly corrupt and unlikely — more often that not — to act in the interests of those with little to offer.)

    Second, as the author notes, slums often exist not merely as place where people live, but also as a self contained micro-economy and therefore encouraging people to move out of the slum may also spur the fragmentation of a system that provides a means of living for thousands of people. Hence, providing an incentive for people to disperse to various locations, as property rights would, might not be a sustainable solution without additional programs to provide people with new economic opportunities.

  4. By Anonymous

    This post accurately identified one of the causes of the Dharavi slum. Lack of property rights have prevented landowners and businesses from investing and developing the infrastructure that would allow the area thrive. However, in order for such a solution to be effective, property rights must also be enforceable. Although establishing property rights is an essential step in solving the problems Dharavi, it is also incomplete because it does not alleviate the failures of the Indian government that are the root problems underlying these slums.

    The three main failures of the Indian government in Dharavi are 1) not enforcing property rights, 2) not providing basic infrastructure and safety and 3) stifling growth by enforcing overburdensome economic policies with corrupt officials. Without the resources to delineate property lines, evict trespassers and secure property, the rights proposed in the post above would be of little value to the residents. In this scenario, illegal housing would still be developed and slum lords would still claim resources through intimidation and force. Even if these property rights were perfectly enforceable, the underlying distrust that disincentivizes investment in infrastructure and creating legitimate businesses in Dharavi would not be addressed because the corruption of the government and its inability to provide both basic infrastructure and rule of law would remain.

    Slum conditions in Dharavi would still persist if a solution that only addresses one of the three major problems in Dharavi were implemented. In order for any solution in Dharavi to succeed, it needs to confront all three of the Indian government’s failures that incentivize residents to live in slums and create “under the table” businesses.

  5. By Sachin Desai

    As a law student, I should be a fan of property rights. However, especially in the case of Dharavi, I believe strong property rights fail in promoting redevelopment.

    The legal-economic theory is that when people have property rights, they will most-efficiently use their properties, and society wins. It works very well for internal, intra-property development – house-owners maintain their own houses. However, it turns out to work very poorly for social development – in particular infrastructure development. Take the US as an example. The result of our strong property rights regime is that people just think just about their narrow economic interests – their individual interests have separated from societal interests. This is a.k.a. NIMBY-ism. Waste processors have to go somewhere. New roads usually come at someone’s expense. Yet when property rights are strong, the people that lose out “hold out” and prevent development. NYC embodies this, with its high-rise wonders and crumbling infrastructure. Dharavi doesn’t need a legal regime that further promotes internal development of tiny slum-parcels. 85% of Dharavi households have TV! Instead, Dharavi needs social/infrastructure development – roads, public lighting, clean water. Empowering interests that dislike change will not enable this.

    I also want to push back on the idea that development harms Dharavi’s culture. Dharavi isn’t a UNESCO site – it’s a temporary housing ghetto. Those residents concerned about their narrow “traditional” interests are forsaking the children that are born every day into an environment that isn’t working nicely, but is instead rampant with antibiotic-resistant disease, lacking real educational opportunities, and under the thumb of slumlords and gangs. With redevelopment some neighborhood bonds may be broken – but many more will be made – through improved education, access to government services, and the opportunities that come from improved infrastructure and health. I suspect it may just be developed-country thinking to assume Dharavi residents prefer their lifestyle. Remember, they came to Dharavi to escape poverty, not get trapped into it.

  6. Candy,

    This is an interesting idea. I like the idea of property rights, and a more bottoms up solution.

    However, I have three concerns:
    1. I don’t agree with the assertion that in slums, “everything seems to be working rather nicely”. While things may work better than they seem, slums have noted problems with sanitation and health, and lack other basic services.

    2. The sum each individual or family could receive for their land may be too low to allow them to purchase any other living option, like an apartment or another house. Slums are often located close to work places, so that commutes are relatively short, and a less expensive location further away may not be preferable. Additionally, the land is only valuable to a real estate developer if many people sell; small pockets aren’t valuable. In the case that the home owners don’t have a viable alternative, you still have the slum, and people have property they can’t do anything with.

    3. This system may encourage people to sell their land, move to another undeveloped area, and start a new slum (or build on a new area adjacent to the existing slum). The new area may be equally inexpensive and well-located. In that case, you haven’t addressed the core problem of the slum, only moved it to another area. If you went with a property rights based scheme, you’d have to create (and enforce!) property rights all over the city.

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