Ap ri l 1988 ISSN 0163-6510
Vo l. 12, No. 3
The Urban Edge is pub Iished 10 times a year in
Inside: English , Spanish , and French by the World Bank. It is
concerned with practical approaches to urban prob-
Poland: Housing scarcity 3 lems in developing countries . Views and interpreta-
5 tions contained in the newsletter are those of its
Argentina: Economic losses editors and contributors and should not be attributed
Projects, resources, training , conferences 7, 8 to the World Bank. Address correspondance to the
World Bank, Room S-10-021 , Washington , D.C. 20433.
Telephone (202) 473-3948. Writer/editor: Alison
Raphael, Associate editor: Barbara Koeppel.
Ignoring Policy Linkages Can Be Costly
Housing, Macro Policies: Tracing the Links
ousing has traditionally been If, however, both housing and mac- permanent dwelling built in low-in-
H viewed by economists and policy-
makers as a consumer good- a prod-
roeconomic policies are made from
the perspective that housing is not a
come developing countries. Urban
populations continue to grow, albeit
uct that absorbs capital but does not costly social good , but rather is a pro- at a somewhat slower pace than
ontribute toward economic growth. ductive capital good , the housing sec- has been the case in recent decades,
ecause housing has so often been tor can make a significant contribu- throughout Asia , Africa, and Latin
viewed as a " social" -or nonproduc- tion to both economic growth and America . By the turn of the century,
tive- sector, little attention has been improved housing conditions. nearly 80 percent of the world 's pop-
given to the effect that housing sector ulation will be living in developing
Growing housing demand countries; by the year 2025, it is pro-
policies have on the economy as a
whole. Likewise, most economists That there is a need for more hous- jected that some 4 billion people wi ll
have not explored the ways in which ing in developing countries is widely be living in cities in the developing
national economic policies affect the agreed . During the early 1980s, nine world.
housing sector. new households were formed for each Equally important is the fact that
Research being carried out in the
Urban Division of the World Bank is
taking a new look at the relationship
between housing and the macroecon-
omy. The research suggests that there
are strong and important linkages be-
tween the two and concludes that the
price of ignoring these interrelati-on-
ships can be high , both for the housing
sector and for the economy as a whole.
Macroecono mic policies implement-
ed without consideration of their po-
tential effect on the housing sector and
housing policies that focus only on
housing as a social service, can- and
often do-weaken the housing s~ctor,
hich, in turn , will weaken the rest of Even when government housing policy is designed to stimulate housing construction ,
policies at work in the larger economy can inadvertently undermine these goals. Many of
the economy, according to urban econ-
the policies adopted to cope with current global economic problems have the unintended
omists Stephen Mayo and Robert effect of reducing the incentives to invest in housing.
Buckley.
2 the Urban Edge April 1988
by the year 2000, roughly 80 percent tween 2 and 8 percent of a country's housing's share of fixed capital forma-
of GNP growth in developing coun- gross domestic product (GDP) and tion declined , on average, 17 percent
tries will originate in urban areas. Pro- from I 5-to-30 percent of fixed capital from the mid- l 970s to the early 1980s.
viding adequate housing, services, and formation. Mssrs. Mayo and Buckley conclude
choices of location to urban popu- Housing clearly accounts for a large that one key reason for this anomaly
lations is an important step toward amount of economic activity, and is that government macroeconomic
making cities work more efficiently while it certainly has an important policies, often inadvertently, are dis-
and thereby facilitating national eco- social function-providing shelter- it couraging investment in the housing
nomic growth . is also a vital national asset. Thus, the sector. Equally serious, most policy-
Given the current scarcity of ade- two economists argue, to focus exclu- makers are unaware of the indirect
quate housing, enormous amounts of sively on the social functions of hous- costs of these policies.
new investment in the sector will be ing is to look at the sector from the
required to meet future needs. Most of wrong end of the telescope. Moreover, Reduced access to credit
this investment will come from indi- housing is an unusually durable asset. The ongoing world economic crisis
viduals and families . The overt role of Because of housing's long life, policies has raised the stakes of continuing to
governments in the housing sector is that consider only its social functions view housing from a narrow, sectoral
normally low: only about 2 percent of can affect the valuation of a large perspective. The economic environ-
government expenditures, on average, component of a country's store of ment of the late 1970s and early 1980s
are for housing. Mssrs. Mayo and wealth. was characterized in many countries
Buckley argue, however, that to view Research into the dynamics of the by very high real borrowing rates,
the relationship of housing to the ma- housing sector carried out in recent severe balance of payments problems,
croeconomy solely in terms of the ex- years has shown that, under normal and high inflation. Inflation and eco-
penditures visible in a national budget conditions, as economic development nomic instability made it less attrac-
is to "misunderstand fundamentally proceeds and the percentage of house- tive for households to put their sav-
the broader effects of government's hold income required for food de- ings in financial institutions. Not on!
restraints on the sector." creases, the amount households are did the financial base available to po-
Far more important are "off-the- willing to spend on housing and re- tential borrowers often stagnate or
books" policies- such as those defin- lated infrastructure tends to increase. shrink, but governments put greater
ing regulatory frameworks , pricing Evidently, households view housing as demands on this base in order to fi-
policies, and policies affecting the fi- a good investment. For many of the nance their expenditures. Thus, there
nancial sector-that influence the per- urban poor, it is seen as a directly has been greater competition for a
formance of the housing sector and productive investment and a source smaller quantity of funds , with the
affect the way in which its perfor- of supplementary income, either from result that access to credit for house-
mance influences the macroeconomy. rent or through the use of housing for holds has decreased significantly.
When local and national officials productive activities. Despite the demand for housing
think about housing, the two econo- The research currently under way, credit in most developing countries,
mists say, they should not limit their however, indicates that this empirical- governments have not permitted an
thinking strictly to sectoral policies, ly documented process has not been increase in the quantity of mortgage
but rather should consider how trade, taking place in most developing coun- funds available because they want to
monetary, and fiscal policies indirectly tries during the past five to seven reserve credit for what are viewed as
influence the shelter sector. years. Housing investments are not the "productive" sectors or utilize it
increasing along with growth in in- for current government expenditures.
Housing's role in the economy
come- despite population increases Although decisions regarding what
The stakes of making good housing and the resumption of economic constitutes a productive sector may
policy are high, as the sector forms growth in many countries-and vary from country to country, the key
an important part of a nation's real households are not choosing to invest point is that policymakers are making
wealth. The value of a country's hous- in this durable asset. In fact, the frac- decisions about where credit is to be
ing stock is typically larger than the tion of GNP invested in housing fell allocated based on criteria that do not
size of its gross domestic product and by between 11 and 24 percent during take into account the demand for, and
often represents its largest single com- the late 1970s, according to a survey productive potential of, housing.
ponent of reproducible wealth, com- of 50 nations undertaken as part of the Directing available credit to th
prising between 30 and 50 percent of research. Moreover, countries' invest- tradeable goods sector, as well as
total reproducible assets. Investment ment portfolios have undergone a sig- other macroeconomic policies put in
in housing typically amounts to be- nificant shift away from housing- ( conrinued on page 6 )
the Orban Edge 3
April 1988
food), 13 percent of current govern-
Poland: Housing is Scarce ment expenditures, and nearly 3 per-
cent of GNP. Moreover, these figures
Despite Gover nment Spending are understated because they fail to
take into account off-budget subsidies
in the form of below-market interest
n examination of Polish account- on savings held in Polish banks has
A ing books would suggest that en-
suring an adequate quantity of hous-
ranged between minus 8.3 percent and
minus 47.6 percent.
rates for housing loans made to pur-
chasers of cooperative housing. These
subsidies alone are roughly equivalent
ing is a major national priority. Some • Foreign exchange and import alloca-
to another l-to-2 percent of GNP,
13 percent of all government outlays tion policies
according to Mr. Mayo's research.
are allocated to the housing sector. Yet Between 60 and 70 percent of all
• Price controls
there is a serious scarcity of housing. imports are allocated by the central
Rent control is in force in all state
Many of Poland's macroeconomic government. Because housing does
housing, and rents are held at no more
and housing policies act indirectly to not generate export earnings, the sec-
than 2-to-3 percent of household in-
exert a negative effect on the housing tor has received a declining portion of
come. The rents derived cover less
sector and the performance of the imported resources as the government
than one-third of operating costs; the
economy as a whole. has increasingly allocated imports to
state subsidizes the remainder. Coop-
What are the policies in question? the tradeable goods sector in order to
erative housing is also heavily subsi-
generate foreign exchange.
Macroeconomic policies dized; rents are tied to initial capital
This policy has resulted in a serious
costs and current operating costs rath-
• Directed credit lack of building supplies, tools, and
er than reflecting market value.
Because Poland's economy is cen- construction equipment. This situa-
• Ownership controls
trally planned , the government plays a tion , in turn, has contributed heavily
About 50 percent of Poland's hous-
key role in allocating credit and re- toward a dramatic decline in produc-
ing stock is privately owned, most of
ources among the various economic tivity in the housing sector, which ,
it located in rural areas. However,
sectors. Since housing is viewed as a according to the Polish Housing Min-
households are not permitted to own
" social" good , it has been less favored istry, fell by 27 percent between 1978
more than one dwelling. Speculative
than the more " productive" sectors, and 1982.
building for resale is not permitted,
such as mining and manufacturing.
Housing sector policies nor can investors borrow against the
Thus total spending on housing has
high expected return of the asset. Thus
represented a smaller share of GDP • Housing subsidies
despite the fact that the value of hous-
than is the case in other countries with Government subsidies for housing
ing is quite high from the investment
comparable levels of per capita GNP are primarily in the form of credits for
perspective, the opportunity to make
and housing shortages. newly produced cooperative and state
a profitable investment is foregone.
• Negative interest rates housing, and they constitute a major
The government, not market forces, share of government expenditures. Building houses could boost GNP
sets interest rates in Poland. Between In 1985, budgetary expenditures for
These policies have resulted in sev-
1982-86, according to research carried housing represented 34 percent of all
ere housing shortages that have lasted
out by Mr. Mayo, the real return household subsidies (second only to
far beyond the postwar period. Other
countries in which large quantities of
housing stock were destroyed have far
surpassed Poland in rebuilding . Since
Editor's Note 1970, there have been approximate-
Previous issues of The Urban Edge have examined the role and importance of
ly 18 percent more households than
housing finance systems (10.8 & 10.9) and the need for governments to make available dwellings in Poland, whereas
housing markets more efficient through improved regulation of inputs such as land the ratio in other Eastern European
and infrastructure (11.9). Following up on these ideas, the current issue presents countries has improved over that pe-
new research on the relationship between housing and macroeconomic policies, riod and was in the range of 7 or
which is being undertaken by economists within the Urban Division of the World
8 percent by 1980. Average waiting
Bank.
Readers may also be interested to note staff changes that have occurred since times for cooperative housing are as
.C October. The new editor is Alison Raphael , who was formerly the associate editor.
Barbara Koeppel is now the associate editor, and Maria Victoria Montes is
high as 14-to-15 years in Warsaw. Jn
1985, there were 2.4 million house-
handling all matters related to subscriptions from developing countries. holds on waiting lists for state or
4 the Urban Edge April 1988
cooperative housing, while the total ucts decreases proportionately . an annual inflation rate of 25-to-
housing stock was only I 0. 7 million percent if it were financed through the
units . Effects on savings patterns
printing of more currency.
There is little doubt that increased As is the case in most countries, the Finally, consideration must be giv-
investment in housing would be highly bulk of savings used for investment in en to potential changes in the way
desirable in economic terms. Sales Poland comes from households, and, resources are allocated and what
of private housing demonstrate that likewise, Polish households tend to tradeoffs are involved. The declines in
housing prices are often from 50-to- save most when interest rates offer a productivity that have resulted from
150 percent higher than current con- good return . However, due to the lack policies aimed at increasing exports
struction costs, indicating a very high of options for holding financial assets , through allocating resources and for-
potential economic rate of return to Polish households are basically limited eign exchange to the tradeable goods
housing investment--ca lculated at be- to two choices: to spend their money sector may not be acceptable, once a
tween 15 and 37. 5 percent. or to save it at negative rates of return . new perspective on the role of housing
If, postulates Mr. Mayo, investment Thus, if housing were to provide is adopted. If a non-tradeable good,
were to be shifted from other sectors high rates of return, it is very likely such as housing or infrastructure, has
to housing, the "minimum direct eco- that households would both increase a higher rate of return than a trade-
nomic benefit of building enough their rates of savings and invest their able good , the decision as to how to
housing to eliminate the existing defi- savings in housing. Says Mr. Mayo: allocate resources cannot be made on
cit has been calculated to be equal to " In Poland, the difference between the simple basis of potential export
40-to-65 percent of GNP." Because real rates of return of perhaps 20 per- earnings. Or, according to Mr. Mayo,
the rate of return almost certainly ex- cent in housing and deposit interest "If a small net volume of foreign ex-
ceeds that yielded in sectors that have rates that have rarely been positive change is generated at the expense of
been favored by current macroeco- within the past decade implies that a a large domestic opportunity cost, is it
nomic policies, Poland's rate of GNP significant savings response could ac- worth the price?"
growth could be expected to improve company increased opportunities for A related question arises when i
during a period of increased invest- housing investment. " As a result, it is sues such as the savings to be gain
ment in housing. quite possible that most of the re- from increased labor mobility are ex-
sources required to eliminate the cur- amined . Again , the tradeoffs must be
The effect on employment
rent excess demand for housing could weighed carefully: are the long-term
Not only would employment oppor- be supplied by households themselves. effects of increasing labor mobility
tunities grow as GNP increased, that could result from reducing hous-
but expanded investment in housing Macroeconomic effects
ing shortages worth some sacrifice in
would be likely to have an important Such changes in the housing market current foreign exchange earnings? In
effect on the mobility of the labor would , in turn, have important effects addition , Mr. Mayo suggests that the
force, the lack of which has been iden- on the economy as a whole. Rather economy-wide costs of increasing re-
tified as a severe constraint on produc- than siphon resources from other sec- source allocations to the housing sec-
tivity in Poland. The difficulty of ob- tors of the economy, it is expected that tor might well be offset by declines in
taining adequate housing discourages increased housing investment would the import of consumer goods, as ex-
workers from pursuing new employ- replace expenditures on consumer cess consumer liquidity is channeled
ment opportunities. Thus, in cities goods and investments in areas where into housing.
where housing is scarce, wages are productivity is low. In addition , most Jn summary, it becomes clear from
often unusually high to compensate of the investment funds would be com- the research that the implications of
workers for the difficulties involved in ing from households, not from the policies affecting the housing sector
obtaining housing that result in long, government, permitting a dramatic touch upon a wide range of economic
expensive commutes or the implicit decrease in government subsidies for phenomena: employment, wages, pro-
cost of having to share housing. housing and thereby facilitating a sav- ductivity, the competitiveness of Pol-
Econometric research carried out ings of as much as 5 percent of GNP. ish exports, household savings, gov-
by Mr. Mayo and James Stein indi- Reduced subsidies would also most ernment subsidies and budget deficits,
cates that such wage policies increase likely lower inflation. Off-budget sub- inflationary pressures, and potential
the wages of urban workers by be- sidies have been found to have a major rates of economic growth. Thus, con-
tween 5 and 20 percent, depending on effect on inflation. Research in Col- cludes Mr. Mayo, " the stakes of fu.
the industry. As a result, local produc- ombia showed that government damental reform of policies affectin
tion costs are higher, and the interna- spending roughly equivalent to Po- the housing sector in Poland are very
tional competitiveness of Polish prod- land 's housing subsidies would cause large indeed." Ifill
April 1988 the Urban Edge 5
Argentina: Subsidies Lead to Heavy Losses
t appears at first glance that the investment in housing. Thus, by 1985, tional Mortgage Bank (BHN), whose
I Argentine government provides few
resources to the housing sector. Only
the public sector share of housing pro-
duction had almost doubled , to about
portfolio consists almost entirely of
indexed mortgage loans.
3 percent of "on-the-books" govern- 50 percent. Taken together, these fac- FONAVI controls resources equiv-
ment expenditures are for housing. tors have contributed heavily toward alent to about I percent of Argentina's
However, Argentina's housing policy plunging the Argentine housing mar- GDP and, in recent years, it has pro-
is such that large- but unmeasured- ket into disarray since 1980. During vided funding for over 60 percent of
subsidies are provided for housing. this decade, Mr. Buckley says, the fol- the subsidized housing produced in
When these subsidies are considered, lowing trends can be observed: Argentina. The average per capita in-
government spending on housing ac- • net housing production has been come of FONAVI beneficiaries, about
tually exceeds net new investment. very low, and if net depreciation is $750, is well below the median income
The combination of housing and taken into account, was probably ne- for the country. The units produced
macroeconomic policies in place in gative from 1984-86; cost about $18,000- a very high figure
Argentina has caused disruption in • the supply of rental housing units in for low-income housing. No down-
the housing finance system and heavy Greater Buenos Aires shrank by more payment is required , monthly pay-
losses to the economy as a whole, than 25 percent; ments cannot exceed 20 percent of
according to the research of World • real rents more than doubled in the income, and the loans are indexed to
Bank economist Robert Buckley. Fur- Buenos Aires metropolitan area; the minimum wage rather than the
thermore, he argues, although the mo- • housing's share of GDP fell to 2 rate of inflation or the real cost of
tives for giving the bulk of subsidies to percent, less than half its historical funds.
the poor may be both understandable level. Such policies, especially in light of
nd well-intentioned, the policy is re- Argentina's high inflation rates and
Mistargeted subsidies shrinking incomes, have made it diffi-
lting in a worsening of shelter con-
ditions for the majority of the pop- Argentina's housing subsidies are cult for FONAVI to recover the costs
ulation, particularly the poor. In targeted to benefit the chronic poor or of its loans. In fact, only about 2-to-5
countries such as Argentina, "the best existing homeowners rather than the percent of expenditures are ever recov-
way to help the poor is to get the large segment of the population that ered, making the per unit subsidy far
system functioning properly for every- has become impoverished due to re- higher than it appears on paper-
one," Buckley says. cent macroeconomic policies. The two probably more than $16,000, accord-
main instruments of Argentine hous- ing to Mr. Buckley's calculations.
The macroeconomic environment ing policy are a fund for public hous- Moreover, the scarcity of housing and
Argentina is a highly urbanized ing, FONAVI, collected through a 5 consequent increases in real rents,
country that has experienced in recent percent tax on wages, and the Na- combined with the absence of alterna-
years a 20 percent decrease in per
capita income, very high real borrow-
ing costs and rates of inflation, as well
as high levels of capital flight. The
risky financial environment and the
imposition of interest rate ceilings
on deposits have discouraged people CD ~
from keeping their savings in domestic ~
E
financial assets, resulting in a sharp g-
contraction in the size of the formal 0 ~
financial system. Simultaneously, by .~
the mid- I 980s, real borrowing costs ~
1
were more than 30 percent, while in- a;
£
flation ate away at deposits to create
This high-rise apartment complex. located in Buenos Aires. 1s typical of the housing
egative real rates for savings.
financed for low-income households by FONAVI. Argentina·s public housing fund Such
Given the shaky environment, long- expensive and h1ghl:(, subs1d1zed units have resulted 1n substantial losses to the Argentine
term credit became nearly impossible economy
to obtain, forcing households to defer
6 the Urban Edge April 1988
tive savings vehicles that offer positive es paid by these million families are to either low-income households tha
returns to savers, make the value of almost certainly larger than the value were unable to afford housing before
the resources provided to households of the benefits received by the limit- the economic crisis, or to exist-
through FONAVI almost double that ed number of families receiving sub- ing homeowners, whose outstand-
which could be measured from a sidized FONAVT housing. ing mortgage debts are, de facto , being
strictly "on-the-books" perspective. The BHN, meanwhile, due largely forgiven by FONAVI or BHN, the
While FONAVI provides large sub- to an inflation-induced reduction in Argentine system ignores the segment
sidies to about 30,000 households an- the value of its loans, is being kept of the population that could afford to
nually, there are well over I million afloat by Central Bank disbursements mobilize some of its own resources to
households poor enough to qualify for and , by 1986, was over $I billion finance housing.
subsidized housing that are excluded behind in repayments-representing An alternative approach , Mr. Buck-
from benefits simply because the sys- about 1.5 percent of Argentina's GDP. ley suggests, would be to attempt to
tem lacks the resources to build more stimulate housing production by as-
houses. Many of these households Losses to the economy sisting these households to enter the
could mobilize some of their own re- Thus, concludes Mr. Buckley, there housing market. The size of the per
sources for a house. Given the high is ample evidence of a system in dis- unit subsidy could be reduced from
relative return to this form of saving, equilibrium. Well over 2 percent of current levels to a much smaller lump
they would be likely to do so if the GDP is being channeled, through sub- sum, and grants could be given to
government could provide another sidies, into the housing sector; rents those below a certain income level
small portion of the financing re- have more than doubled ; and other who were willing to mobilize a signifi-
quired to build an inexpensive house. forms of savings are yielding reduced, cant share of their own resources to
Instead, the government is providing deeply negative, returns- yet there is build a house.
close to 90 percent subsidies for very a lack of net new housing production. As a result of such an approach, the
expensive housing units to a far small- Due to the macroeconomic environ- amount of government resources re-
er number of families. ment, the market is not responding to quired to build each new house woul
The excluded households have ex- the incentives to build more housing, decrease; or, put differently , the go
perienced sharp rises in real rents so housing values have inflated well ernment could stimulate more produc-
(about 16 percent annually), largely beyond their real costs. Mr. Buckley tion per dollar. An increase in the
because current macroeconomic poli- calculates that the " welfare loss," or supply of housing, in turn , should pro-
cies have created an environment in loss to the economy as a whole, due to voke a decrease in rents, indirectly
which there is little production of the misallocation of resources may be benefitting the entire renting popula-
housing other than that financed by as large as 6.5 percent of GDP- an tion, rather than helping just a limit-
FONAVI or BHN. Mr. Buckley calcu- enormous loss of resources. ed number of beneficiaries purchas-
lates that the cumulative rent increas- By distributing housing subsidies ing units. l!l3
( con1i11ued.from page 2 )
place to deal with the effects of the deal with its financial problems fre- the lack of attractive investment in-
global economic crisis-such as over- quently has a direct effect on housing. centives.
valued exchange rates, import restric- Moreover, as less housing is built and The case studies of Poland and Ar-
tions and tariffs op shelter sector im- the country's stock of wealth remains gentina, each representing one ex-
ports, interest rate ceilings, and hous- stagn ~ nt or declines, the policy results treme of the policy spectrum, provide
ing price controls- have played an can be seen to feed back into the larger examples of the types of policies that
important role in the reduction of economy, weakening it. are in force in the developing world
housing construction. This, in turn, Furthermore, in an environment today. In Poland, macroeconomic pol-
has negative reverberations through- where households cannot invest their icies have thrown the housing sector
out the economy as a whole, as may savings in housing, they are forced to into disarray; in Argentina, housing
be seen in the case study of Poland. seek other outlets. This can result in a policy is causing serious losses to the
The results of such policies do not decision to invest or save overseas, or economy as a whole. Both cases illus-
appear on the government's ledgers, to spend available capital on imported trate that the costs of ignoring the
nor do they become apparent from consumer goods, draining scarce for- linkages between housing and them
a strict examination of government eign exchange from the economy. Or, croeconomy are higher than ma
housing policy. Nonetheless, the in the final analysis, households may economists and policymakers have
means selected by a government to reduce their productivity as a result of traditionally believed. l!l3
the Urban Edge 7
April 1988
serviced lots. Finally, it is intended to policymakers who must devise new
that about half of the project works plans for housing the poor.
PROJECT NOTES will be affordable to urban families The papers analyze government
living at or even beneath the poverty subsidized rental and home ownership
ECUADOR: housing The Ecuadorian level. schemes (sites and services and slum
Housing Bank (BEV) will initiate a REPUBLIC OF KOREA: urban upgrading) and housing finance stra-
nationwide investment program of transport. The Taegu City government tegies. Also, some treat the issues of
$312 million to increase the supply of is launching a $145.7 million project to squatter relocation, housing location,
housing for the poor and reduce pub- improve its transportation system. A and travel costs, and one describes the
lic subsidies. A World Bank loan will World Bank loan of $30 million will importance of community networks
contribute $60 million to this effort. assist authorities to ameliorate traffic in squatter settlements. The collec-
The loan will primarily help finance congestion, safety and other transport tion .draws from experiences in India,
12,000 serviced lots with dwelling un- problems, that are the result of a 20 Bangladesh, Thailand, Nepal, Japan,
its of various sizes, serviced lots with- percent annual increase in the number and Singapore.
out units, and 15,000 home improve- of vehicles registered in the city. A number of the papers touch
ment loans (for upgrading). It will also As was the case in recent World on India's extreme housing shortage
provide technical assistance, vehicles, Bank-assisted transport projects in (one-third of the population in that
and other equipment for the agencies Seoul and Pusan, this newest effort country is without shelter), others
administering the project. In order to aims to alter current conditions by stress the lack of access by the poor to
calculate public demand for such a developing low-cost traffic manage- affordable land and building materi-
program, which, in turn, will enable ment schemes that include installing a als, and still others critique the level of
authorities to determine the quantity computer-based traffic control center government commitment to provide
and types of shelter needed, BEV con- to increase road capacity and improve housing, water, and sanitation.
ducted surveys-and will continue to traffic flow, reorganizing the intersec- One paper, "Shelter for the Home-
o so each year. tions where the greatest number of less in the Indian Context," calls on
A key element of the project is a accidents occur, and improving public authorities to adopt laws and poli-
new long-term mortgage plan based transport. The project also includes cies that will make land and financ-
on adjustable rates that will enable the construction of a major urban ex- ing available. "Housing Options for
families with incomes lower than pressway. the Shelterless," as well as "Reloca-
those that historically have qualified A key objective is to coordinate the tion of Squatters in a New City," an-
for financing to gain access to loans. tasks of transport planning, construc- alyze weaknesses of past sites and ser-
The rate would vary annually accord- tion, and enforcement, which are now vices projects, assess their effect on the
ing to the rate the BEV was paying on carried out by different municipal de- poor, and suggest ways to make the
savings deposits. To ensure ongoing partments, within a single traffic man- concept work. The latter lists the find-
affordability, however, a "cap" would agement bureau. ings of household surveys, calculating
be imposed so monthly payments the extent to which relocation affected
could not exceed 25 percent of house- the residents' income, job opportu-
hold income. Any repayments higher nities, and work-related travel costs.
than this figure would be rescheduled
RESOURCES The paper also examines the quality of
for a later date; if necessary, the repay- the core construction and the experi-
ment period would be extended. But if Shelter for the Homeless: Policy, Con- ence of households that have tried to
it required extension by more than 30 straints and Strategy, Habitat Centre obtain financing.
percent of the original time period, the International and Centre for Human
amount over 30 percent would be for- Settlements, 25-27 Netaji Subhas Rd., Robert C. Prevost, "Corrosion Pro-
given by the BEV. Calcutta 700 001, India, 1987. tection of Pipelines Conveying Water
Due to a policy that reduced con- The 15 papers in Shelter for the and Wastewater: Guidelines," World
struction norms and standards (under Homeless: Policy, Constraints and Bank Technical Paper No. 69, 1987,
a previous housing project), it is esti- Strategies were presented at the Third $6.50.
mated that the average cost of housing International Congress on Human With the price tag for water supply
funded by BEV will drop by about 20 Settlements in Developing Countries and sewerage systems for cities with
1ercent. It is also calculated that 85 in early 1987. They describe the ex- populations of I million or more near-
percent of urban families will be able perience gained in housing programs ing $1 billion, the bulk of which is for
to afford the home improvement loans and policies over the decade from pipelines, it is critical for authorities to
and 80 percent will have access to the 1976-86. The findings should be useful take steps to guard against corrosion
8 the Urban Edge April 1988
that ultimately destroys the systems lowships can be obtained through INRDM will sponsor a workshop
and, most important, can be pre- the Netherlands diplomatic represen- on "Geographic Information Systems
vented. tatives. Using Microcomputers" Aug. 8-31 at
The author describes how corrosion the AIT campus in Bangkok. For de-
can be controlled through "relatively The Laboratory of Architecture and tails, write the Coordinator, fNRDM
simple design and construction mea- Planning, Massachusetts Institute of program, at the above address.
sures and maintenance. " By drawing Technology, Room N52-491 , 77 Mas-
from a large body of literature and sachusetts Ave., Cambridge, MA.
case studies, the paper describes the 02139, U.S.A . CONFERENCES
different forms of corrosion and offers The biennial International Shelter
guidelines for preventing them. The Workshop seminar will run June 13-24 "New Approaches to Housing and
case studies, which chronicle both suc- and focus on micro planning, building Planning: Looking Forward after 75
cesses and failures with metal and skills, managing land, and strengthen- Years of JFHP" is the theme of the
nonmetallic pipes, focus on experi- ing both local government and com- IFHP (International Federation for
ences in Belgium, Yugoslavia, Saudi munity organizations. Housing and Planning) 39th World
Arabia, Norway, Ghana, the United Congress, May 15-20 in The Hague.
States, and Hong Kong . Royal Institute of Public Administra- The themes of the plenary sessions
tion , RIPA Services Overseas, Regent's and workshops include (I) people and
College , Inner Circle, Regent's Park , housing in the 1990s, (2) planning as a
TRAINING London NWl 4NS, U.K.
RIPA's International Program con-
framework for action, and (3) the elec-
tronic (r)evolution and urban/regional/
tinues in 1988 with courses on " Mod- national planning. For details, contact
Institute for Housing Studies (!HS) , ern Auditing Practice in the Public JFHP, Wassenaarseweg 43, 2596 CG
P.O. Box 20718, 3001 JA , Rotterdam , Sector" (June 6-July 29); "Man- The Hague, The Netherlands.
The Netherlands. agement of Training" (July 18-0ct. 7);
IHS will hold its 52nd Internation- and " Records Management in Gov- The 12th annual International Ne
al Course on Housing, Planning, and ernment" (Aug. 22-Nov. 11). Towns Association conference on
Building in Rotterdam, Aug. 16-Dec. "Shaping Change in Urban Commun-
16. The course, designed for profes- Asian Institute of Technology , Inter- ities" will be held in Malmo, Sweden,
sionals from the Third World and con- disciplinary Natural Resources Devel- June 12-17. For more information, con-
ducted in English, will focus on hous- opment and Management Program, tact International Secretariat, Wasse-
ing policies for low-income people. ( INRDM ), G.P.O. Box 2754, Bang- naarseweg 39, 2596 CG The Hague,
Registration closes on April 15. Fel- kok 10501 Thailand The Netherlands.
r------------ -------------------------------------
1
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