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The Formal Determinants of Informal Settlements in Bogota, Colombia

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The Formal Determinants of Informal Settlements in Bogota, Colombia The Formal Determinants of Informal Settlements in Bogota, Colombia by Andres Guillermo Blanco This thesis/dissertation document has been electronically approved by the following individuals: Warner,Mildred E (Chairperson) Nicholson,Charles Frederick (Minor Member) Roldan,Mary Jean (Minor Member) THE FORMAL DETERMINANTS OF INFORMAL SETTLEMENTS IN BOGOTA, COLOMBIA A Dissertation Presented to the Faculty of the Graduate School of Cornell University In Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy by Andres Guillermo Blanco August 2010 © 2010 Andres Guillermo Blanco THE FORMAL DETERMINANTS OF INFORMAL SETTLEMENTS IN BOGOTA, COLOMBIA Andres Guillermo Blanco, Ph. D. Cornell University 2010 The central question in this dissertation is why formal mechanisms of housing production and land allocation have been unable to absorb the growing demand in the cities of the developing world. My general methodological approach is to analyze the historical process of urbanization of Bogotá, Colombia a city known by the prevalence of informality and its rich experience in the implementation of different land and housing policies. My hypothesis is that informal settlements are structural to the formal process of production of the built environment because, within a context of inequality and natural property rights, this process tends to under-provide land with urban services. The dissertation is structured as three interrelated papers. In the first paper, I study the relationship between an institutional context dominated by the concept of property as a natural right and the pattern of under-provision of urban services arguing that informality is engendered in the same formal process of production and allocation of the built environment because the concept of property as a natural right produces a dynamic of privatization of benefits of city growth and socialization of its costs that results in under-provision of urban services. In the second paper, I study the causes of the pattern of under-provision using a political economy and a stakeholder approach. I explain the paradox of why urban services are under- provided when they can increase land values by more than their cost by describing how this pattern is compatible with the incentives of the stakeholders involved in the production and consumption of the urban space. In the third paper, I represent the articulation between the formal and informal mechanisms of housing production using a simulation model based on System Dynamics. Using the model I show how informality arises from the inadequacy of a system of infrastructure financing based on tariffs and cross-subsidization and from the unintended consequences of the traditional interventions to deal with the problem such as up-grading and public housing. I also propose and test a policy based on eliminating the interventions that are incentivizing informality and shifting the source of financing infrastructure from cross-subsidies to property taxation. BIOGRAPHICAL SKETCH Andres G Blanco was born in Bogotá, Colombia. He received his Bachelor degree in Economics in 1999 and his Master of Science in Regional Development Planning in 2005 from the Universidad de los Andes in Bogotá. Between 1999 and 2006 he worked as a researcher and consultant in different projects involving local governance and urban development for organizations like the Lincoln Institute of Land Policy, the United Nations Development Program, the Departments of Finance and Government in Bogotá, and the Universidad de los Andes. He also worked as a bank manager in an industrial district in his home town. In 2006 he started his doctoral studies in Cornell University under the guidance of Drs. Mildred Warner, Charles F. Nicholson, and Mary Roldán. Currently, he is an Assistant Professor in the University of Florida, where he teaches courses and conducts research about the economic aspects of planning in areas like housing, land use, and economic development. iii ACKNOWLEDGMENTS I would like to thank my Committee, Drs. Mildred Warner, Charles F. Nicholson, and Mary Roldán, for their guidance, advice and encouragement. I am also grateful to the Department of City and Regional Planning and the Latin American Studies Program at Cornell University for funding part of my field work and to the Department of Urban and Regional Planning at the University of Florida for relieving me of part of my teaching duties during the spring semester 2009. In Bogotá, I received help and insights from many scholars and public officials, my sincere thanks to all of them. Last but not least, I would like to thank my family for their constant support and patience. iv TABLE OF CONTENTS Biographical sketch…………………………………………………………………...iii Acknowledgments…………………………………………………………………..…iv Table of contents…………………………………………………………………...…..v List of figures…………………………………….………………………………...…..x List of tables.……..………………………………...…………………………………xii Chapter One: Introduction……………………………………………………….….1 1.1 The question……………………………………………………………..…1 1.2 The work plan…………………………………………………………..….4 References…………………………………………………………………..….8 Chapter Two: Determinants of informal settlements: the literature about the Latin American case……………………………………………………………….…9 2.1 Macro-structural conditions………………………………………………..9 2.2 Micro-motives………………………………………………………….…13 2.3 Market based explanations……………………………………………..…15 2.4 Failure and unintended consequences of public interventions……………17 1950s and 1960s: prohibition and discouragement………………..…18 1970s and 1980s: acceptance and encouragement………………...…19 1990s: market friendly responses………………………………….…21 2000s: progressive planning……………………………………….…23 2.5 Conclusions…………………………………………………………...…..25 References…………………………………………………………………….27 v Chapter Three: Logics of allocation of the built environment and natural property rights: land entrepreneurialism and informal settlements in Bogotá, Colombia…………………………………………………………….…..….30 Abstract……………………………………………………………….…..…..30 3.1 Introduction……………………………………………………….…...….31 3.2 Four ideal logics of collective decision about the built environment.........34 3.3 The four logics in Bogotá, Colombia……………………………………..37 The market logic……………………………………………………....37 The rational-comprehensive logic……………………………………40 The participation logic………………………………………………..43 The resistance logic……………………………………………..…....44 3.4 The collusion of the four logics: land entrepreneurialism……………..…46 3.5 Determinants of land entrepreneurialism: natural property rights………..48 3.6 Property rights in Colombia: the long process towards a social notion of property……………………………………………...…….……50 3.7 Conclusion: informality and natural property rights………….…………..54 References…………………………………………………………………….58 Chapter Four: No-growth machines: why urban services are underprovided in Bogotá, Colombia……………………………………………………...…………….67 Abstract………………………………………………………...……………..67 4.1 The paradox of under-provision of urban services……………………….67 4.2 The ‘rationality’ of under-provision……………………..……………….70 Landowners………………………………………….………………..71 Pirate subdividers…………………………………...………………..74 Planners…………………………………………...………………….78 vi Utility companies………………………………..……………………81 Developers……………………………………………………………84 Low-income households………………………..……………………..87 The national government……………………….…………………….89 International organizations…………………….……………………..91 Politicians………………………………………...…………………..92 4.3 Conclusion: the political economy implications of the no-growth machine and the possibilities of change………………………………..…94 References……………………………………………….…………………..100 Chapter Five: Why formal housing alternatives in developing countries are insufficient, inadequate, and unaffordable: a model of the process of production of the built environment in Bogotá, Colombia………………...……107 Abstract…………………………………………………………………..….107 5.1 Introduction………………………………………………………..….…108 5.2 The model………………………………………………………….……110 Housing demand and formal supply…..…………………….....…....110 Urban services provision and informal housing……………….…....113 Public policies and interventions…………………………….……...117 5.3 The results……………………………………………………………….122 5.4 Model evaluation………………………………………………………...129 Structure and parameter verification, and dimensional consistency……………………….………………………….………129 Extreme conditions…..…………………………………….………...130 Replication of the reference mode………………………….……….132 Behavior sensitivity, behavior anomaly, and boundary adequacy….136 vii 5.5 Conclusions and policy recommendations…………………...………….138 References………………………………………………………..………….145 Chapter Six: Conclusions………………………………………………….………149 Appendix A: Model operationalization……….…………………………………..153 A.1 Formal housing demand and supply………..…………………………..153 Population growth………………….……...……………………...…153 Population per category of demand….………..…………………….155 Household size and households per category of demand……..…….157 Desired stock per category……………...…………………………..158 Housing stocks………………..……………………………………..159 Ratio demand/supply and desired production………………....……163 A.2 Urban services for low-quality housing………………..…………….…164 Tariffs for high- and low-quality housing………...…………...…….166 Cross-subsidies from other uses………………….…………………168 Minimum requirements and services support function……..……….169 Low-quality housing supported by cross-subsidies………..………..170 Low-quality housing supported by general budget…………….……171 Feasible production of low-quality housing………………..……….172 A.3 Public housing………………………………….………………….……174 Annual public housing production………….………………….……176 Public housing stock………………….…….……………………….177
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