Relocation or upgrading? Improving the welfare of slum dwellers

Slums are a prominent feature of most developing nations’ cities. It is commonly believed that slum and squatter settlements in central urban areas do not use the land they occupy productively. Accordingly, policies to increase land-use efficiency often involve the relocation or displacement of slum dwellers to peripheral or marginal lands. Such activities compromise the Millennium Development target of improving the lives of slum dwellers as it reduces their welfare. From a poverty-reduction perspective, the welfare of this group is most enhanced when resources are put towards upgrading the settlements in which they already live.

A report from the World Bank uses data from the Indian city of Pune to suggest better ways of understanding residential choices in developing country cities and identifying policies that are able to improve the welfare of slum-dwellers. Pune has a population of 2.8 million, of which close to 1 million live in slum settlements distributed throughout the city. Researchers sought to identify why poor slum dwellers are willing to live in hazardous and under-serviced locations. They also investigated what the advantages of living in slums were and what amenities their residence gave slum dwellers. Examination of poor people’s perceptions of the quality of their housing, their tenure status, access to infrastructure services and daily mobility patterns showed that:

• Poor households prefer to live close to their work
• They are willing to pay significant premiums in order to live in areas that are composed of households that share their language, religion, level of education and average length of tenure in the neighbourhood.
• Although transport costs matter, they are less important for slum-dwellers than community characteristics.
• If a household must be relocated, it greatly prefers to be moved to a community that resembles its current community.

The researchers examined the potential impacts of five alternative slum interventions in terms of their impact on the welfare of slum dwellers in Pune. These were: upgrading public services to slum households without moving inhabitants; relocating individual slum dwellers from a central slum to a peripheral ward; relocating individual slum dwellers to a peripheral ward and upgrading public services in the new location; relocating slum dwellers as a community to a peripheral ward; and relocating slum dwellers as a community to a peripheral ward and upgrading public services in the new location.

Frequently those relocated are worse off than they would have been had they remained in their original homes. Upgrading of informal settlements, rather than demolition and resettlement of inhabitants, increases the welfare of the slum dwellers who receive these interventions. It may also spill over to increase the welfare of non-slum dwellers in the neighbourhood, through increases in property values and the improvement of basic services. The analysis showed that:

• Improving dwelling unit quality on site dominates other options – even when relocation elsewhere involves the provision of improved dwelling units.
• A combined approach – including commuting costs, public services, and individual preferences for community characteristics – is the most useful way to examine the strength of the factors which determine household location choice decisions.
• Demonstrating the presence of benefits of slum upgrading programmes to non-slum dwellers is important to ensure their viability. Non-poor urban residents whose taxes pay for public goods must be convinced of the benefits of such programmes.

Source(s):
‘Location and welfare in cities: impacts of policy interventions on the urban Poor’, Development Research Group, World Bank by Mudit Kapoor, Somik V. Lall, Mattias K. A. Lundberg and Zmarak Shalizi, May 2004 Full document.

Funded by: DFID (Urban Knowledge Generation and Toolkits programme)

id21 Research Highlight: 27 November 2004

Further Information:
Somik V. Lall
Development Research Group
World Bank
1818 H Street, N.W
Washington DC 20433
USA

Tel: +1 202 473-1000
Fax: +1 202 477-6391
Contact the contributor: slall1@worldbank.org

Development Research Group, World Bank

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'Moving with the times: rethinking resettlement in Mumbai'

'Financing housing for the urban poor: opportunities for civil society-state-private sector collaboration

'Linking housing and enterprise development: lessons from Kenya and India'

'Cities alliance: tackling urban poverty'

'Kanpur Slums Sanitation Project' from FASTtrack

'Pipelines to Partnerships' from Homeless International