Leveraging Transit toward a Strategy of Anticipatory Urbanization

By James Cody Birkey

Most human geographers predict an unprecedented pace of urbanization to occur over the next half-century. This is a result of a broad set of convergent factors, one of which is the migration of poor rural populations to urban areas. This rapid growth has placed particular demands on cities, especially in the developing world. Very often, cities and governments either ignore these communities, or see them as a problem. It is hard to say which is worse.

As response to the development of slums, many national and local strategies try to “deincentivize” their growth. The assumption is that by intentionally disenfranchising these areas by limiting access to urban services, rural-urban migration might be kept at bay.

Billy Cobbett, head of Cities Alliance at the World Bank, explained recently at Harvard not only how pervasive this stance is in the developing world, but how unbeneficial it is. He argued for the inevitability of the trend of urbanization, and that it ought to be harnessed rather than distained. Assuming he is right, what kinds of tools might governments and the private sector have to approach this phenomenon constructively?

To pair this notion of a city that “anticipates” the inevitable influx of population with some of the financial efficaciousness of transit systems like the BRT might open up some very interesting possibilities. Transit has the power to drastically shape economic geographies of cities precisely because cost (in time and money) of commuting overwhelmingly shapes land values. Therefore, in cities struggling to dictate urban form in the face of growth of unserviced slums, could a BRT-linked land development strategy positively incent growth in currently undeveloped areas best for the city as a whole?

In the United States during the early 1900’s, large-scale landowners struck deals to bring trolleys out to lands they owned on the edge of the city. In a time when most people commuted on foot, a transit offering drastically changed the value and urban relevance of a parcel of land, and these new “suburbs” developed rapidly. Using the same principal, is it possible to coordinate with local entities to stretch BRT—which is much less expensive than trolleys or subway—ahead of time out into areas the city ought to grow? Is it possible to do this in a coordinated fashion, such that financial opportunities exist for private enterprise to engage cohesively or even take the lead? Perhaps governments could agree to build systems like this in trade for certain percentages of inclusionary housing, or other strategies that might engage the poor.

Doubtlessly, dealing with urban growth, especially regarding economically-constrained populations, is multi-faceted and will require a broad set of tools. However, this idea—particularly with transportation—to move ahead of growth rather than simply to respond to it, might open up doors to much better-planned transit systems in the long term, as well as unlocking newly valuable land at a price that can be attainable for the populations that will inevitably move in.

One thought on “Leveraging Transit toward a Strategy of Anticipatory Urbanization

  1. Nice post, Cody. I agree with you that “transit has the power to drastically shape economic geographies of cities” through its impact on land values. Not only transit, throughout the history of urbanization, transportation has been driving cities to grow towards various directions. Highway “contributes” to urban sprawl, while transit leads to compact / smart growth. Since “high-profile” transit modes – metros, BRTs – provide convenient access to amenities and housing, unsurprisingly a high demand of its adjacent areas will be generated accordingly. The golden supply-demand function is again proved here – wherever transit goes, wherever land value grows, and wherever development happens.

    This phenomenon enlightened us a possible financing means of transit infrastructure construction – land financing. As Prof. Macomber elaborated in class, Hong Kong MTR covers its cost by grasping development profit of land adjacent to metro alignments. This also reminds me of the land financing metric of a subway project that I involved in Nanchang City, China. Only the phase I of Line 2, out of a subway network plan of 5 lines, would cost more than $2B. Nanchang city’s major financing strategy is to purchase all possible land along planned subway alignment, hold and wait, then sell it after metro construction to capture the land value appreciation. I graphed “land financing”, the major financing method for the subway project, according to Ms. Lin, the project manager from Urban Rail Company, a state-owned company (as shown below in the link).

    From the example illustrated in the graph, we can get a return ratio on investment of roughly 18 (=160/8.95). While on one hand, this land financing metric proves its potentiality as a powerful financing tool to public infrastructure; one another hand, I’m worried about its sustainability in long term economic impact. What if land financing is used to fund an expensive infrastructure construction (i.e. MRT) which is not actually necessary? What if land financing is excessively used as a GDP driver? What if infrastructure construction and land financing decision are made in favor of corrupted politicians who received “benefit” from developers? Will land financing contribute to a unhealthy real estate market with unaffordable housing?

    Transit is important and necessary for creating more efficient and sustainable cities. However, transit is also lucrative. A misplaced transit development could be unsustainable and dangerous in the long run.

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