ICYMI – Week of July 21, 2017

 

  • Bloomberg reports that London’s housing prices have flat-lined. The article puts forward quotes from several authorities on real estate economics, but the gist of it is that housing prices went well beyond normal ranges in the last few years and are slowing to “normal” levels. In another article, Bloomberg reports that luxury properties are taking a hit as well.
  • In the realm of today’s infrastructure that will be obsolete tomorrow, consider gas stations. We all envision a world of autonomous electric vehicles, so what happens to the gas stations? Likely they’ll be redeveloped and reclaimed by the city, or become electric charging stations, but in the meantime, how about art?
  • Consumer values are crossing geographic boundaries, as marketers are increasingly seeing similar tastes and preferences in demographic cohorts in a globalized world. I suppose this is something new for marketing, but in broader demographic analysis I always found it frustrating how these cohorts/categories are made. “Millennial” preferences really just refer to things young people do, and whether one is young (in terms of tastes and preferences) is increasingly more a product of one’s life stage than age. Single 35-year-olds share more in common with single 25 year-olds than coupled 35-year-olds, and the same applies in the other direction. Tastes and preferences are more influenced by major life events than people realize.
  • The Guardian took a brief look at the “future gazing industry” (that includes people like me) and how it’s grown in the recent past. I really enjoy the process of forecasting and the insights it brings. People mistakenly assume it’s some black-box calculator when in fact it’s just a way of doing research and synthesizing information, together with a healthy dose of probability analysis. Something to really appreciate about this work, though, is how a good forecast has less to do with fancy insights and mathemagic (of the sort pundits become famous for) but more for its ability to build consensus. There’s a lot to say, but I should save it for a separate post.
  • In light of the many measures the Province of Ontario is taking to cool the housing market here, some rather interesting measures are being proposed in California. The state, particularly the San Francisco Area, has seen housing prices skyrocket in the last several years. In the face of a major affordability crisis, homeowners are facing off against municipalities and those who have been priced-out of the market in a battle between maintaining character and increasing densities and housing supply (sound familiar?). This is an interesting echo of what is happening in the GTA, though Ontario is contemplating amending the OMB to give local communities more say, while California is contemplating a fast-track process for affordable housing developments that will circumvent the rezoning process.
  • Not content enough with selling books, electronics, knick-knacks and soon fresh produce, Amazon is allegedly moving into online residential real estate services. The page which tipped GeekWire off has been taken down, but it would be an interesting move at a time when the realtor industry is rapidly digitizing (from searching for properties online to doing property showings on Snapchat and Instagram).
  • More exciting news as Elon Musk tweeted that he has “verbal” approval to start digging a tunnel between New York and Washington D.C. Initial thoughts on it sound like a legitimate test for his tunnel boring project as well as the Hyperloop. I’ve been very skeptical that the Hyperloop really was anything more than a pipe dream, but Musk has accomplished some rather extraordinary things since he got into the transport business, so I’ll remain cautiously optimistic.

ICYMI – Week of July 14, 2017

This week had quite a bit of excitement. We got climate change doom & gloom, smart cities, diners and teleportation!

  • The internets were abuzz with this very scary NYMag article about how bad climate change is. It paints a pretty scary picture of a runaway greenhouse effect from all the different carbon+methane feedback loops that will kick off once the ice melts and turn into another mass extinction event (like the Permian event which killed 96% of life on Earth). It makes for a good, though sobering, read, but it didn’t take long for the less panicked to chime in. Notable is a Facebook Post by Michael Mann, one of the people who proposed the “hockey stick” graph of climate change, stating that it’s a bit much to say all life could end in a hundred years. The Atlantic released a longer critique, calling it “an unusually specific and severe depiction of what global warming will do to the planet.” All in all, it’s not to say that climate change will not severely impact the ability for life to thrive on the planet, but we shouldn’t panic and launch Zero Dawn just yet.
  • One of the urbanism groups I follow on Facebook posted a link to the pwc Competitive Cities report. I have a healthy skepticism of city rankings (particularly livability rankings, largely because if you unpack them, you find out they’re heavily skewed to wealthy places with a high perception of public safety). However, they’re always an interesting marketing/branding tool for cities to draw investment from companies looking to attract young, tech-nomad types.
  • More details on Facebook’s new campus came out. It’s generally been met with a lot of positivity (at least in my feeds, but my feeds skew towards the big tech blogs). It’s on my “to write about” list to look at the history of company towns and how tech campuses are attempting something different (or not). Silicon Valley and many of the larger tech clusters are close to or within major cities, but I’m curious as to whether they will remain that way if the cost of living in these places gets too much for workers once they have kids. Open question, definitely something to ponder.
  • The whole smart cities theme is a big interest (obviously, based on the title of this blog). It’s been fascinating to watch this topic evolve over the years and a draft post is sitting in here somewhere on the evolution of the smart cities concept (I’ll get to it one day, says procrastinator Yousaf). For now, here’s a good overview based on Anthony Townsend’s Medium post:
    • Smart Cities 1.0 – a set of services and infrastructure provided by large technology firms. This is the sort of stuff you hear from IBM’s, Ciscos, and Googles talking about how they’re creating new ways for cities for function.
    • Smart Cities 2.0 – a push towards digital engagement of citizens and service delivery, led by governments themselves. Boston’s Office of New Urban Dynamics and NYC’s Mayor’s Office of Data Analytics fall under this frame. More recently, here’s a fun overview of what Oslo is doing.
    • Smart Cities 3.0 – smart citizens and civic technology. This is where citizen groups advocate for and take charge by addressing technology solutions themselves.
  • Also, check out this cool concept out of the Netherlands letting the elderly manage traffic lights on their phones so they can increase their crosswalk time. The technology relies on the software that already exists in the crosswalk’s hardware, which makes it extra special.
  • I’ll admit I haven’t yet watched the lecture myself, but the premise sounds like it will be a good watch. Maths and the metropolis; or how network analysis can help us better understand how cities function.
  • There was this wonderful article in the Guardian in January about the decline of the British Curry House and another from 2015 on the pub. This week, I came across a NYMag article on “The Death of the New York Diner“. I’d chalk it up as another sad tale in the on-going saga of declining main street retail activities, but places like neighborhood eateries and pubs are different (considering how many mornings of my early-20s I spent at Pratt Diner). Aaron Renn describes my thoughts on it: “the decline of the diner is not just about the loss of a restaurant format – those come and go – but also the decline of shared social space and the increasing alienation between social classes and groups.”
  • Futurology time again! I know when you saw the intro up top talking about teleportation you got excited. Well researchers in China have managed to teleport a photon (a particle of light) from a lab on earth to a satellite in space. The internets were really excited about this but, alas, all those headlines claiming that we’ve finally teleported an object are wrong – the team working on it teleported data, not an object. The article linked here gives some explanation of quantum entanglement, but it’s a tricky concept to grasp.
  • I did a short post on procedurally modelled cities way back when, thinking about how cities might be created for VR or other platforms. Even though we have the know-how and technology to generate endless cities virtually, there’s still the romance of places we’ve physically experienced coming into our virtual realms (part of why I love games like Fallout). This week, researchers from NYU released a LiDAR scan of Dublin (link to data here) and it’s gorgeous.
  • Finally, if you love those high-contrast streetscape maps (a la Allan Jacobs’ Great Streets), Geoff Boeing at UC Berkley wrote a Python code for generating them for any location. Happy mapping!

ICYMI – This Week on the Internet – July 7th, 2017

Some quick thoughts about a few of the articles I’ve been reading and following this past week:

  • Toronto’s housing market is always in the news with the wild swings as the powers-that-be try to gain some control of housing prices. After a lot of fanfare about a number of new measures as part of the Fair Housing Plan (including a foreign-buyer’s tax and more stringent rent-control measures) a first cut on housing sales activity has been released and it’s showing a drastic reduction in sales. However, the initial reports on foreign-buyer activity shows the number of foreign-buyer purchases in the Greater Golden Horsehoe is less than 5% of the market (though John Pasalis at Realosophy did tweet that this figure is an average and it’s likely higher and lower for specific sub-markets). This is in-line with what industry had initially been saying when the tax went into effect. So if the foreign-buyer component is so small, what’s causing the slowdown in sales? The simple answer is that it’s not any one thing. The Fair Housing Plan consists of several measures, including more stringent rent-control rules that also affect domestic investors, and there was an overall sense in the market that the Bank of Canada would be raising interest rates this year. Overall, housing market activity has been incredibly heated over the last two years before slowing down in the summer when policy measures were announced and sentiments towards an interest-rate hike became more certain. On a bit of a side, but related, note: Following on the heels of its foreign-buyers tax last year, which cooled down the market for only a few months before it picked up again, Vancouver introduced an empty homes tax this week.

 

  • Let’s talk a bit more about housing in a broader sense rather than the whacky GTA real estate market sense. One thing that’s striking is that housing prices are soaring everywhere (well, major cities anyway). That’s led to a lot of people proposing different ideas of what constitutes a “home”, as people increasingly find themselves priced away from the traditional notions of home ownership (a detached house with a yard in much of North America). In the thought experiment sphere, a group of young upstarts in the UK are trying to redefine notions of a “house” for generation-rent by unpacking traditional layouts and looking at the functional value not just of space but also of furniture. Following tight on the micro-condo/container housing craze, a developer in Sacremento, California, is testing the MicroPAD (Micro Prefab Affordable Dwelling). The City of Sacremento is hoping to use it as a strategy for providing affordable housing for homeless residents. Modeled on similar prefab housing solutions in Sweden, the modular units are manufactured overseas (China and Poland) and snapped together on site. As a result, a MicroPAD costs significantly less than a similar unit built on site using traditional construction methods (as they do).

 

That’s it for this week.

Evolution of Housing Policy in the Developing World

Recently I gave a lecture to an undergraduate international development class at York University. It’s probably worth a post, so I wrote up the notes from the lecture into a blog post. Enjoy (though it’s a long one).

The discussion begins by setting the a context and describe trends in urbanization around the world. The key question to explore is “Why are people moving to cities?” followed by the major housing issues as they’ve been addressed in the international development regime, particularly driven by the World Bank. This involves the exploration of housing through a few different approaches or stages:

  • First the initial push/pull factors and the development of informal housing;
  • The first wave of policy responses through the provision of public housing;
  • The second wave of policy responses, the site-and-servicing approach; and
  • Finally, the third wave of policy responses, the land titling approach.

Let’s consider overall trends in urbanization. One of the key statistic thrown around is that, as of 2007, half the world’s population lives in urban areas (UN). In context, 200 years ago, less than 5% of the world’s population lived in cities. By 1900, this figure had raised to 14%. The driving force behind urbanization has consisted of a primary push and a primary pull factor:

  • Industrialization has created many employment opportunities in urban areas; and
  • At the same time, the potential economic opportunities in rural areas have declined.

Over the last 20 or 30 years, this has led to rapid population growth in cities globally.

un-pop-forecast

In the developed world, most countries are fully urbanized, and the developing world has rapidly been catching up:

  • At a high level, countries in Africa have urbanized at the slowest rate, from roughly 15% in 1950 to 40% in 2014;
  • Countries in Asia were just under 20% urban in 1950 and are nearly 50% urban in 2014;
  • Countries in Latin America and the Caribbean were 40% urbanized in 1950 and 80% urbanized in 2014;
  • For comparison, North America is 80% urbanized, Europe 73% and Oceania 70%.

un-urbanization-rates

Over the next 30 years, nearly all the growth in global population, or 2-billion-plus people, is expected to occur in urban areas in the developing world.

Cities are also growing much larger. At the start of the 20th Century, 16 cities, mostly in industrialized nations, contained a million or more people. Today, almost 400 cities have more than a million people and 70% of which are in developing countries. Furthermore, “megacities”, or the number of cities with more than 10 million people, have also been growing rapidly. To give you a sense of scale, the three largest megacities by urban area are:

megacities

Each of these cities has roughly the population of Canada (image source: Tokyo, Sao Paulo, Chongching)

In developed countries, urbanization followed directly with industrialization and people moved to cities directly based on economic demand. However, the correlation between urbanization and rising per capita incomes in developed economies was found to be absent in some developing countries, particularly those in Sub-Saharan Africa. Urbanization without growth characterized many Sub-Saharan African countries in the 1990s, creating a new type of housing demand in a much more urbanized, if poorer, world. The main drivers of this urbanization without growth have been extreme rural poverty, natural disasters, and civil wars. Though the majority of the world’s poor people continue to live in rural areas, poverty is rapidly becoming an urban phenomenon. Simply put, more people moved to cities than local economics and city services to could handle, which has had consequences for housing

At the rates that many cities have grown, public sector agencies have been unable to provide enough housing fast enough. Through the course of the 20th Century, housing for the urban poor has generally come in two forms:

  • Public housing, or housing units provided by the government; and
  • Spontaneous housing, otherwise called shanty towns, favelas, katchi abaadis, slums and many different names.

The formal private sector is generally not in the business of providing low-income housing unless it is through state subsidies. The informal private sector works through spontaneous housing.

An important component affecting housing across the developing world has been the influence of major donor and development institutions, in particular The World Bank. The World Bank didn’t really dive into housing issues until around the 1970s, though. Prior to the 1970s, the Bank’s focus was on providing small-scale assistance mainly towards income-producing infrastructure, such as ports and power plants. Since it entered low-income housing projects in developing countries in 1972 the World Bank has exerted a powerful influence in the development of housing theory and policy. So, who provided housing for the urban poor during up until this period? Well it was largely the driven by the governments of the countries themselves.

Traditional public housing provided by many government agencies are still out of the reach of many of the poorest residents of these cities. Historically, public housing has mainly been used to house families in the lower-middle class. Rents alone are often too high for low-income households. Government housing generally led to the displacement of urban residents from their usual location (usually with access to employment or community services). Housing projects were often located on the fringes of cities, away from the major employment centres. Residents had to be able to afford to commute to work.

How governments in developing countries approached the provision of public housing prior to the World Bank’s liberalization policies was reflective of the heavy focus on state sponsored welfare following World War 2. For most countries, the housing policy was a standalone public sector process completely independent of the private sector. That is, public, or affordable housing was to be provided through the state. This push for public housing was part of a very large urban renewal process in many countries, including in North America, where large tower blocks of affordable housing, such as Toronto’s Regent Park, were built. From 1950 to 1972, the dominant public policy in low-income housing was based upon the state’s role as provider of public housing in the form of permanent construction units, often apartments. Well into the 1980s, the countries that made up the former Soviet Union as well as Argentina, China, India, the Republic of Korea, Mexico, and many African countries had very active public housing programs. Under the stronger state policies of many countries aligned with the former Soviet Union, the state actively discouraged the production of private sector housing. The central planning approach to housing policy was largely abandoned with the fall of the Soviet Union in 1989 and a shift to market-oriented economic policy in China and India in the 1990s.

HK Public Housing

Public Housing in Hong Kong (image source)

China is the exception amongst developing and emerging economies that is still building public housing at a mass scale using a top-down approach. However, the results are mixed. According to the UN, China built 36 million subsidized units by 2011, though they were only accessible for 20% of their targeted users. Many of these units are in “ghost cities”, major urban developments undertaken that never saw the demand anticipated and are currently mostly empty. The UN reports that there are nearly 65 million empty units in China, which amounts to 20% of the country’s housing stock.

Why was publicly subsidized houses too expensive for the poorest members? Large-scale affordable housing projects undertaken by developing country governments have often required capital financing by international donor organizations. The concept behind the development loans was that residents, having a proper legal home, would be able to access better employment opportunities and higher incomes. However, the anticipated increases in employment and income for the poorest members did not materialize, resulting in public housing being out of reach for the lowest-income brackets. As a result, the state produced expensive and heavily subsidized housing that could meet only a fraction of demand. Due to the cost of building and operating public housing, either the buildings were entirely occupied by those in the lower-middle income brackets or became overcrowded with a greater number of residents per unit than had been planned for. In a broader sense, public housing was a standard approach in industrialized countries and it was transplanted without much thought about differing contexts into developing countries. The underlying assumptions of public housing were driven by the hope that, in developing countries, it would be more affordable, effective, and eventually eliminate unsanitary conditions and town planners’ perceived disorder in squatter settlement.

Those who cannot afford to enter into formal housing rely on the informal market: squatter settlements, spontaneous housing, or slums. As a result, many international development agencies have focused on those living in slums.

How is a slum defined? A simple definition used by UNHABITAT is “a heavily populated urban area characterized by substandard housing and squalor”. A more recent, operational definition used for policy response defines a slum as an area that meets the following characteristics:

  • Inadequate access to safe water;
  • Inadequate access to sanitation and other infrastructure;
  • Poor structural quality of housing;
  • Overcrowding; and
  • Insecure residential status.

As opposed to state sponsored public housing, housing provided in the slums is generally outside the purview of the state and the broader real estate market, called the informal sector. The term “informal sector” refers to activities in an economy that are neither taxed, regulated or monitored by any form of government. The concept was initially developed to describe black or grey market activities in developing countries. Today the informal sector provides most of the housing in developing country cities:

  • 60-70% of urban housing in Zambia;
  • up to 90% in Ghana;
  • 70% in Lima; and
  • 80% of new housing in Caracas

Such housing usually has at least some of the characteristics that UN-Habitat uses to define slums; poor physical condition, overcrowding, poor access to services, and poor access to employment opportunities. Beyond traditional notions of slums, spontaneous housing also extends to people who are homeless or live in very unexpected areas. An example is Cairo’s largest cemetery, the City of the Dead, home to an estimated half a million people or more (add image from Wikipedia and Khalil Hamra / AP).

Recently, housing in the City of the Dead has included apartment blocks, and many units have access to water and electricity, a medical centre, post office and schools. Some of the biggest slums in the world are also large enough to warrant being defined as cities in their own right (at least by Canadian standards).

World Economic Forum’s list of the five largest slums in the world are:

Largest Slums

World’s largest slum communities (image source)

In addition to size, slums settlements are also incredibly dense. Dharavi, in Mumbai, has 10 times the population density of Manhattan.

Let’s discuss some broad issues and misconceptions about slums or spontaneous housing. The initial responses to slums by urban development experts in developing countries was predicated on the “modernization” theory or “benign neglect” interpretation of slums:

  • Slums are a transitory phenomenon characteristic of fast-growing economies and they progressively give way to formal housing as economic growth trickles down; and
  • Slum dwellers, or their children, eventually move into formal housing within the city, so that the benefits of migration into the slum get passed along from generation to generation.

The basic concept was, slums could be neglected, as the market would eventually help people find their way out. These concepts are derived from the fact that slums were a distinctive feature of European and US cities during the Industrial Revolution. Today, large slum settlements have disappeared in most advanced economies, but it is far from clear how comparable these historical examples are to the situations faced in the developing world.

Developing country slums, however, have come out of differing conditions and have taken different paths. Slums have not been temporary. Many slums in developing countries have remained for decades and millions of households find themselves trapped for generations. Some slums are in countries experiencing rapid economic growth, such as China, but many slums are located in countries with slow or stagnant growth. In 2003, UN-Habitat found that:

  • 41% of Kolkata slum dwellers had lived in slums for over 30 years, and more than 70 percent had lived in slums for over 15 years; and
  • In a case study of Bangkok slums, 60 percent of individuals were reportedly born in the same slum.

The prevalence of slums is highest in sub-Saharan Africa, where slum dwellers represent 62 percent of the urban population. In Kibera, Kenya, data suggest that living conditions have either deteriorated or at best stagnated over the 1999–2009 period, a period during which the economy as a whole grew at 3.5 percent per annum. Between 2003 and 2007, 15% of slum residents moved locations. Of these, only 22% moved to a non-slum area. The rest either moved to another slum, moved within the same slum, or moved back to rural Kenya. Despite variations across these settlements, common issues of lack of adequate living space, insufficient public goods provision, and the poor quality of basic amenities are consistent and which lead to extremely poor health and low levels of human capital.

I’ve touched briefly on international development policy in relation to housing. Let’s go over how the current policies specific to slums evolved. Until the 1970s, the prevailing approach was of slum clearance or benign neglect. By the 1970s, it became clear that neither would address the continuous expansion of slums. Slum inhabitants were not being pulled away by improved economic prospects nor being pushed away from the less-desirable aspects of unregulated slum living. The thinking on slums changed to being considered an affordable option for the urban poor. Although housing is sub-standard it plays a crucial role by proving shelter at low-cost to the urban poor. The theoretical basis of the current thinking came from a British architect named John F.C. Turner based on his experiences working on slum-upgrading projects in Peru in the 1950s and 1960s. Turner established his theory on housing development in the book Freedom to Build: Dweller Control of the Housing Process, which was first published in 1972. Turner’s approach, called “aided self-help”, became the basis of housing policy moving forward, including sites-and-services and land tenure-ship. Aided self-help sought to shift the concept of housing from the provision of a good to a process: “housing as a verb”. It re-conceptualized the nature of housing from ‘shelter’ and physical ‘human settlements’ to include the ‘economic’, the ‘social’, the ‘environmental’, and the ‘urban’ as important components of housing. Within these settlements the residents’ capacity to address their housing needs already existed and the solution, therefore, was that public assistance could be used to build on the strengths of the informal housing sector rather than to replace it. Turner proposed that providing only basic services and shelter allowed poor families to expand their units over time as their savings and resources permitted and to use their own labor to maintain and increase their wealth. This approach focused on the importance of such details as the kind of housing units that poor people could afford without subsidies. Under this “aided self-help” paradigm, the World Bank and other policy planners reoriented their policies towards a “slum upgrading” approach.

Two concurrent approaches under the aided self-help model were slum upgrading and sites-and-services. Under slum upgrading models, international development and public assistance was mobilized to provide necessary infrastructure and services within the slums.

An example was the Orangi Pilot Project. Orangi Town, in Karachi, Pakistan, is considered one of the largest, if not the largest, squatter settlement in Asia. Population is estimated at 4 million, though official figures only count 700,000. Not all of Orangi Town is defined as a slum, though overall it is classified as a low-income area. Originated in the Indo-Pakistan split in 1947; the area grew far too rapidly for government response and by 1950, the Government of Pakistan was giving people permission to settle ad-hoc without any services or infrastructure. Today it is a legally recognized as a district by the municipality of Karachi, composed of 13 neighbourhoods (though official response to the demand for infrastructure has been slow). Property and land were initially traded informally with no legal recognition or representation; in the 1970s a system of land titling was introduced to provide better tenure security. Without adequate government support, local groups began organizing and building their own services and housing, creating a micro-economy in the process. The Town is well-known for the Orangi Pilot Project, the highlight of which was a community organized and financed sewage system. Today the community sanitation network covers 90% of the settlement and is completely maintained by the residents.

Orangi

Orangi Pilot Project (image source)

The sites-and-services model was a little different, middle-road between slum upgrading and public housing. The key components provided under a site-and-services model were minimal – a parcel of land, exterior walls, a roof and access to electricity and water. One of the most successful approaches to the site-and-services model actually happened very recently: Quinta Monroy in Chile, 2003.

Quinta Before

Quinta After

Quinta Monroy housing project by Elemental (image source)

In 2002, the Chilean Government contracted a design firm, Elemental, to help them design a housing project for residents of an illegal squatter settlement. The residents were strongly opposed to being housed in a public housing project. In order to house all the families in the same location within the limits of the public housing subsidy offered to the families, Elemental designed what they call “half-a-house”. Instead of building a sub-standard house with all the necessary fixtures, Elemental designed liveable standard houses with only the necessary infrastructure needed for the families to start living there. Using the same philosophy as John Turner, the idea was that the families would upgrade over the years as they needed. These are only some of the success stories. However, there were many problems as these housing concepts were rolled out.

According to much of the literature, early efforts starting in the 1970s to upgrade urban slums have been only partially successful. From the 1970s to 1990s, the World Bank participated in approximately 116 slum-upgrading and site-and-services schemes in 55 countries. The projects were successful in so far as they demonstrated the feasibility of implementing low-cost provisions. The slum-upgrading projects saw greater success than the sites-and-services projects because they delivered much needed services to where the urban poor lived. In contrast, early efforts towards the sites-and-services model turned out to be a lower cost public housing program and, once again, could not address the needs of the very poor. What was missing was a broader link to the housing market and the legal protections of the formal economy.

Now, about the economics of slums. I mentioned briefly the informal sector for housing. That applies to employment as well. I can’t go into too much detail but, suffice it to say, the informal economy in slums is fairly significant. As an example, the estimated value of the goods and services produced in Dharavi exceeds $1 billion. These aren’t goods produced just for residents, they include goods that are exported as well and contribute to India’s economy.

Housing, though informal and low-quality, is also not free. Landownership in informal settlements is a complicated affair. Studies of homeownership and tenureship in Kibera shows that 92% of the households are rent-paying tenants and 8% are owner-occupiers. Of these, 6% claim they own both their house and their land, while 2% say they own the structure but not the land. It’s important to note the difference between the land-owner and the “structure” owner; they’re not always the same person. Owning and renting out structures can be immensely profitable: in Nairobi, studies have reported that annual returns on the housing in slums could be as high as 131%. One study found that 57% of landlords in Nairobi slums were public employees – 41% were government officers and 16% were The remaining 42% were absentee landlords. Connections between the slumlords and local administration have created an informal system of allocation building rights that has become an important source of political patronage. Rents are not cheap. Most households in Kibera live in poverty and figures of average rents showed residents paid approximately 1/3 of their monthly earnings towards rent. The rest went towards food. Data collected in 2004 showed that slum residents paid at least US$31 million in rents, a figure which exceeded the entire City of Nairobi’s annual budget for the year. This informal rental market, albeit distorted, appears to follow many of the rules that apply in ‘‘formal’’ real estate markets—rents vary with house size, quality, infrastructure access, and location. What is missing the formal title or tenureship and requisite protections that legal homeownership.

The experiences with housing in the poorest urban settlements showed that, without the legal protections of the formal economy, life in the slum became a form of poverty trap for most residents. The reasoning was that without formal titles, residents lack the incentives to improve the quality of their homes. As well, due to overcrowding and low marginal returns from small upgrading investments, it may not be rational for slum dwellers to finance investments in housing or infrastructure. Finally, the high rent premiums discussed earlier may not leave much in the way of savings for the residents to invest towards improvements.

In 2000, the Peruvian economist Hernando de Soto published The Mystery of Capital, which argued that secure tenureship through land titles is the reason capitalism has produced a productive economic system in the west and not in developing countries. His argument followed that legal ownership of the land would provide the collateral necessary to engage the urban poor into the formal housing and banking system. The argument for land titling was based on the positive experiences of developing countries and development agencies on providing formality of tenure for rural lands. It also fit well within the aided-self-help model proposed by Turner, of which security of tenure was an important component. Finally, it fit well within the development framework of the World Bank, which, through the 1990s, had shifted its focus from project-by-project support to link housing to the wider urban economy, reimagining the role of development as the idea of ‘enablement’.

Enablement is defined as providing the legislative, institutional, and financial framework whereby entrepreneurship in the private sector, in communities, and among individuals can effectively develop the urban housing sector. The World Bank sought to use housing to develop both the housing sector and the urban economy as vehicles for promoting general economic growth and productivity. In the past 20 years, national governments and the World Bank implemented urban land titling projects in more than 18 African, Asian, and Latin American countries. So, how successful has the land titling approach been?

A few studies have since been conducted to look at the impact of urban land titling on housing investment decisions:

  • In Peru, studies found that land titling increases the rate of housing renovations (by about two-thirds), and showed that titling increased household labor supply (by 10 to 15%) by freeing resources that were previously used to protect household assets; and
  • A study in Argentina showed that the allocation of formal land titles in Buenos Aires led to increased investments and education amongst households who benefited from the titling.

The Argentina case is very interesting though. In 1981, a group of 1,800 families occupied an area of land in the outskirts of Buenos Aires, Argentina. An expropriation law was subsequently passed, ordering the transfer of the land from the original owners to the state in exchange for a monetary compensation. The purpose of the law was to entitle the land to the squatters. The law divided the area’s residents into two groups:

  • One group was granted land titles after the original landowners were compensated by the government; and
  • One group remained on untitled land due to the original owners refusing government compensation.

It created a natural experiment to test the effects of land titles on two samples from the same group of people. The results? Residents did invest more in improving their houses. The titled parcels also had smaller household sizes and the children of residents in the titled parcels showed higher educational attainment. However, it seemed to have very little effect on the households’ access to credit or of the employment opportunities available.

Other studies, referencing projects in Afghanistan, Cambodia, Egypt, India, and Rwanda, showed that land titling projects may have decreased tenure security because they allowed for lawfully enforced evictions.  These studies argue that land titling may benefit the “slumlords” (whose informal ownership rights are often well-recognized locally) and hurt, at the bottom of the pyramid, the slum renters, either in the form of outright evictions or increased rents in the titled area.

The underlying reason for this contradiction lay in the initial assumption behind land titling, that land rights were weakly enforced in slums. A study of on urban land titling in Indonesia addressed this issue and found that tenure security is not a dichotomous concept.

In a West Java, Indonesia, settlement, various land titling schemes launched by the government in the 1980s and 1990s had resulted in a system of land tenureship with 3 levels:

  • Formal land tenure: Dwellers with formal tenure have a property title to their land;
  • Semi-formal tenure: Do not have legal tenureship, but have access to formalizing their tenureship through a legacy traditional law, and so had some level of tenure security;
  • Informal tenure: Dwellers in this category therefore have no legal basis for their tenure.

The study found that there was a more significant difference between household investment levels of the formal and informal dwellers, while the difference between household investment between formal and semi-formal dwellers was marginal. The overall conclusion was that the perception of tenure security was as important to the residents as actual legal tenure.

The debate about housing tenureship has shifted to how tenure security can be enhanced, and whether it ‘‘follows’’ rather than ‘‘leads’’ investment. In Jordan and Kenya, there have been cases where residents invested in making their homes more permanent as a strategy for securing their tenure. Tenure is also related to infrastructure access. Because government agencies see slums as temporary or illegal, they are reluctant to invest in extending public services. Infrastructure investment therefore signals ‘‘acceptance’’ or implicit recognition of informal settlements by government. Tenure is also affected by a neighbourhood’s condition and its location. Neighbourhoods with better conditions—public amenities (e.g., parks, schools), safety, layouts that permit access— are likely to be associated with greater tenure security. The location matters as well—for instance, slums on hazardous sites as well as those in prime locations are more likely to be slated for demolition, even by governments that otherwise support slum improvements.

In the end, the land titling process suffers from a range of practical problems that reduce their potential for gain. First, titling is can be a costly The process can has the potential for protracted legal troubles because of contradictory claims of ownership. Even when a formal financial sector is functioning, many who live in informal housing are often self-employed or work in the informal sector, so it is difficult for them to show proof of income. In the end, it is safe to assume that land titles can be a necessary component of a fully functional housing market, but may not be the precondition required to, on their own, resolve the problem of housing in the developing world.

In this post I’ve explored some of the underlying causes of urbanization, key issues in housing for the urban poor and some attempts taken by the international development community to help alleviate these housing issues. Overall lessons in the literature from countries that have managed to address the growth of slums showed that a responsible approach relies on a combination of instruments, including:

  • Efforts to increase the transparency and efficiency of land markets;
  • To improve local governance;
  • To increase public investments; and
  • To increase the supply of cheap housing.

In recent years, governments have also begun to recognize the importance of community involvement and social capital to leverage resources. As a result, governments, donors and development organizations are moving beyond the top-down technocratic approaches of the early experiences with shelter projects towards a more community-based perspective. Moving forward, the importance of a sustainable means of financing housing investments is growing. Though no clear solutions have so far been brought forward, one area of promise is in the slowly growing field of microfinance. Housing loans account for the largest single asset in the portfolio of one of the largest and most successful microfinance institutions, Grameen Bank of Bangladesh. It remains to be seen how these measures will work out on a broader scale.

Procedurally Modeled Cities

Procedural modeling of cities is a topic that’s been on my mind for a while now. In my day job, I spend a lot of time doing market and policy research in order to inform population and employment forecasts undertaken for land use and infrastructure planning. Whenever I talk to people about my work, I get the sense they assume I spend my day adjusting knobs on a giant black box that takes in one set of numbers and spits out another. This couldn’t be farther from the truth (and I would love it if it were that easy).

What is procedural modeling of cities? It’s an algorithmic process to create a visual model of a city based on a set of rules and relationships.

How does forecasting relate to procedural modeling? Because that’s essentially what we do when we forecast; we try to model how a certain region or city will grow based on a set of rules and assumptions. Procedural modeling may give us a platform with which to visualize our forecasts beyond the standard tables and graphs. It has the potential to physically illustrate the effects of various policies (dependent on responsible analysis).

Hold the horse right here in case you have no clue what I’m talking about and need some background info. I’ll admit this paper has been sitting on my “to-read” pile for a very long time and I still haven’t really dug into it to get to the technical bits and bobs. I’m mostly fascinated with the idea itself and its potential applications (the technical bits can be explored later if I actually pursue a project).

In the general public’s eye, the products are mostly visible in video games. Take Sim City – it essentially accomplishes the same thing but puts you in control of the shape and form (based on that set of underlying rules and relationships between different variables). Use of procedural modeling in games was limited to closed systems due to technological constraints for the longest time (or how much data your computer could handle) but with the recent release of No Man’s Sky we can safely say the sky is the limit (applause).

The potential for application beyond games is huge. With the onset of virtual reality and augmented reality (more important for what I’m thinking of), using procedural modeling to give people a taste of how their cities could grow can be a real game-changer. So much of how we try to present visions of the future to at public consultation relies on the limits to each person’s own imagination (and many people come with preconceived notions that are hard to overcome). Having such an immersive tool to show people how much, or how little, a potential project could change the urban fabric would be invaluable.

Of course it’s not all fun and games and rose-coloured glasses. Any number of nefarious characters could use the same means to turn public opinion over to their darker, more self-serving side. So take my excitement with a grain of salt.

However, it could still be an interesting way to approach scenario planning and policy analysis. Instead of trying to guess how a particular policy or strategy may play out, we could try to visualize it directly through modeling. In order to do it effectively, though, will require us to really test and come to agreement about the types of relationships and their thresholds between different socioeconomic variables that affect land use and infrastructure. We would also need to do a better job of collecting the relevant information in a format that’s consistent throughout time. Right now a lot of the physical features are pulled out of satellite imagery, which may work for things like games or entertainment, but not for serious policy analysis.

Burning Man: Some Thoughts on Black Rock City

I finally went to Burning Man this year, after keeping it on my bucket list for a few years.

Everyone knows about Burning Man and everyone has an opinion on it. Before I went, I didn’t have much of a positive opinion on the event besides that it was some hedonistic party/music festival. After speaking with a long-time burner about the effort and planning that goes into Black Rock City, the setting for Burning Man, I was stung with curiosity. What makes it especially impressive is the scale of the event; I didn’t realize more than 65,000 people attended (2015).

After speaking with a few people about it, I became interested in attending. Soon after looking into it, I realized I knew quite a number of people who attended regularly. Eventually, some friends convinced me to go and I finally went this year (2016).

Processed with Snapseed.

Processed with Snapseed.

If you want a quick overview or a history  of the event, take a peek at Wikipedia or the Burning Man Journal.

The event itself was incredibly fun. The combination of intensely friendly people, great music (there are many options to suit everyone’s taste), amazing art as well as a variety of activities all week including workshops and lectures meant there was never a moment of boredom. The point of this post is Black Rock City (BRC), though, not the festival, so I’ll try and stick to the layout and organization of the city itself, though it does feed into the ethos of Burning Man the event.

To give you a quick notion of what BRC is, here is a map (from the Burning Man website):

brc2016

The city’s plan evolved to its current state over the last two decades through a series of iterations as the festival has evolved and grown (it even has a fully functional airport). At a high level, it is the result of a number of key concepts in urban design and planning, namely the separation of sensitive uses, sight lines and access to key services. Beyond just working as a festival space, BRC does work quite well as a small city. Due to the mobile and temporary nature of the settlement, densities are generally very low but the spatial structure is laid out through a radial plan to allow maximum accessibility.

Looking at the plan above, one gets a sense of how the overall city is laid out. Major blocks represent larger theme camps or villages and the smaller blocks then accommodate smaller camps. Overall, the intensity of activity decreases as one moves further away from the centre (along Esplanade), showing a character similar to most cities (high intensity downtowns and lower intensity, mainly residential, neighbourhoods at the peripheries. Centre Camp acts as a major community hub with event services (community hub, bicycle repair, information booths, permit offices, etc). The larger blocks along Esplanade radiating out of Centre Camp consist of large musically-themed camps (called sound camps) which face their speakers and stages out into the playa and away from the residents of BRC to manage sound and noise levels in the residential areas. Smaller “plazas” are established at key intersections along 9:00, 7:30, 6:00, 4:30, and 3:00 (major streets that act as avenues). Alphabetical streets (A, B, C, D…) and avenues reflecting points on a clock (2:00, 2:30, 3:30…) create an easy to follow and logical street grid and way-finding system. Within the centre of the city is the Man, and the empty space between the man and the city is the “playa” where public art projects are placed. To the north and towards BRC limits is “deep playa” which is sparsely populated with a number of larger art projects.

Processed with Snapseed.

Processed with Snapseed.

Transportation is by foot and bicycle predominantly and by “mutant vehicles” or art cars. Vehicles are allowed in BRC provided they are modified as art and are held to a strict speed limit of 10 mph. I did notice quite a few people riding around on segways or other similar vehicles (hoverboards, etc), but nearly everyone either rides a bicycle or walks. Few people actually move very fast, as vehicle speed limits are strict and masses of pedestrians make it difficult to maintain a quickened pace, whether on a bicycle or another moving vehicle. While having a bicycle does make transport easier (it can take a long time to get from one end of the city to the other), the overall experience is best on foot, as walking allows for more random and unplanned interactions (which increases the amount of time to get from one place to another).

Processed with Snapseed.

Processed with Snapseed.

So, the event espouses a number of good city principles, namely the use of active modes of transportation over vehicular modes and a “leave no trace” principle throughout the event and the city, with very clear rules (and a thorough infrastructure) for garbage and recycling collection. With all the press the event has been getting and how fast it’s been growing in recent years, there has been more scrutiny towards its environmental impact. However, though the organizers do conduct an environmental impact assessment (as required by the federal Bureau of Land Management as a pre-requisite to hold the event), much of the estimated environmental damage results from burners coming to and leaving the event. Though BRC has a “leave no trace” principle that is enforced during Burning Man, the environmental impact isn’t necessarily mitigated as it is transferred elsewhere. The organizers have responded to criticism, and in the last two years have introduced a “Burner Express” bus service to help offset the impact of people driving to BRC. It’s one step, but there are many more to go.

The really big draw, however, is the public art. There is a huge emphasis on art at Black Rock City, with the entire playa dotted with sculptures and installations at are both interactive and not. The city itself is covered in various forms of play structures and approaches to public space engagement. I can’t recall the exact number, but I was advised not to expect to see all the art, that there were hundreds of pieces. It is quite a shock to have spent nearly 3 full days biking around the city and the playa just looking at art (and how many nights) only to see photos on Instagram of countless other pieces and installations that I didn’t see. One could easily spend the entire week just looking at art and skipping all the other events.

Processed with Snapseed.

Processed with Snapseed.

Overall, it was a very interesting experience and an excellent space to test and play with concepts in urban design and planning. How these experiments can be scaled to more permanent spaces in the “default” world remains to be seen. Burning Man is an event and, as a result, people there are far more eager and willing to engage their public space than in the real world. However, it still allows for a fun testing ground to try new ideas.

What’s the quickest way to solve a city’s traffic congestion?

Traffic congestion is partly a result of infrastructure planning and development, but mostly it is a symptom of economic growth.

Infrastructure development is not dynamic – capacity is built to accommodate a certain threshold at one time; once that threshold is reached, congestion occurs. Demand, however, increases according to a variety of factors beyond just the road capacity and the economy is a major driver. As the economy grows and more people can afford to buy cars, the roads slowly fill up. Increasing road capacity is, on its own, an ineffective way to combat congestion because you are not really addressing the root cause of the congestion, just a symptom. Therefore, the quickest way to solve a city’s traffic congestion is, in fact, to kill the economy so fewer people can afford to drive (that’s a bit extreme I guess, you could just make it more expensive to drive through taxation).

For less quick, more sustainable solutions, one needs to consider the principle of the triple convergence (increasing road capacity = more cars due to economic growth + more people now taking the improved road during peak hours who had previously shifted to off peak hours to avoid congestion + more people now taking the improved road who used to take other forms of transportation to avoid congestion = more congestion). Congestion needs to be addressed as part of a systemic upgrade of the entire transportation network, not just a single component of it.

However, as I mentioned above, demand is continuous and dynamic and infrastructure development is not. Congestion is, therefore, the point of equilibrium on the demand/supply graph, and no matter what a city does, economic theory says that equilibrium will always occur. As a result, congestion is inevitable. It is better to manage congestion than to try to “solve” it.

Originally submitted to Quora on April 23, 2015.