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Urban services for the poor
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 | This World Bank research on urban services has focused on evaluating the value of public services, how service delivery can be improved, and how they can be better financed. | Contact: Uwe Deichmann, Udeichmann@worldbank.org | | | Research outputs | Project documents | | | An estimated one-third of all urban residents live in informal settlements or slums—the vast majority in developing countries. Conditions in such areas vary widely from dismal, temporary shelter in squatter settlements to relatively well-constructed, informal housing that may persist for decades. Common characteristics include uncertain tenure status, poor basic services such as water and sanitation, low-grade construction and overcrowded living conditions. Apart from physical deprivation, slum dwellers also often face more subtle disadvantages such as poor labor market integration and the social stigma attached to an inferior residential location. With continuing rapid growth of urban areas, improving the life of slum dwellers is a high priority for national and city governments and the international community. Research conducted in recent years has focused on evaluating the value of public services, how service delivery can be improved, and how they can be better financed. Much of this work relied on detailed household surveys in four cities in India. | | | | Research Outputs | | | In assessing the value of public services, broader social welfare benefits are significant
Better estimates of how residents value services inform strategies for appropriate user fees and cost recovery. This study on water supply in two Indian cities found that willingness-to-pay estimates that consider only individual or private benefits may underestimate the overall social welfare from investing in service supply especially among the poorest residents. The paper further demonstrates how policy simulations based on these estimates help prioritize spatial targeting of interventions according to efficiency and equity criteria.
- "Valuing access to water - a spatial hedonic approach applied to Indian cities," Luc Anselin, Nancy Lozano-Gracia, Uwe Deichmann and Somik V. LallWorld Bank Policy Research Working Paper 4533, 2008.
An important infrastructure policy issue for rapidly growing cities in developing countries is how to raise fiscal revenues to finance basic services in a fair and efficient manner. This paper applies hedonic analysis that explicitly accounts for spatial spillovers to derive the value of improved access to water in the Indian cities of Bhopal and Bangalore. The findings suggest that by looking at individual or private benefits only, the analysis may underestimate the overall social welfare from investing in service supply especially among the poorest residents. The paper further demonstrates how policy simulations based on these estimates help prioritize spatial targeting of interventions according to efficiency and equity criteria.
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| The poor benefit more from public services in Pune, India
How do city managers best prioritize provision of basic public services to reflect local demand? This study presents a strategy to estimate the demand for public services. Using data from Pune, India, the study estimates the demand for public services, as represented by the marginal change in the self-assessed monthly rental price of dwellings from the services. Results indicate that the value of publicly provided services accruing to the poor is greater than that going to wealthier households, and even untargeted across-the-board investment in specific services can be progressive. - "What are public services worth, and to whom? Non-parametric estimation of capitalization in Pune," Somik V. Lall and Mattias Lundberg, Journal of Housing Economics 17: 34-64, 2008. (Based on World Bank Policy Research Working Paper 3924.)
The availability and quality of basic public services are important determinants of urban quality of life. In many cities, rapid population growth and fiscal constraints are limiting the extent to which urban governments can keep up with increasing demand for these services. It therefore becomes important to prioritize provision of those services to best reflect local demand. The authors present a strategy to estimate the demand for public services, which is sensitive to heterogeneity in preferences across types of households, and the nonparametric estimation addresses problems arising from functional form restrictions. Using data from Pune, India, they estimate the demand for public services, as represented by the marginal change in the self-assessed monthly rental price of dwellings from the services. The authors find that the value of publicly provided services accruing to the poor is greater than that going to wealthier households, and even untargeted across-the-board investment in specific services can be progressive.
| | | Is citizen feedback and effective tool for improving public services?
Citizen feedback is considered an effective means for improving the performance of public utilities. But how well does such information reflect the actual quality of service delivery? This study finds that satisfaction increases with improvements in own service status, but is also influenced by comparisons with service levels of neighbors or peers. This implies that satisfaction is at least in part determined by factors that are unrelated to actual service quality experienced by households. | | | Property taxes based on assessed values increase revenue and do not hurt the poor
As many local governments develop own-source revenue such as property taxes rather than relying solely on central transfers, the fiscal and distributional implications of assessment reforms become a major concern. This analysis shows that reform efforts that bring assessment of the property tax base closer to market values have significant positive impacts on revenue generation and do not have adverse consequences in terms of the tax burden faced by the poor. While current assessment reforms are a good first step, structural issues such as improved valuation, increasing buoyancy of the tax, and building taxpayer confidence need to be addressed to make these reforms sustainable. - "Fiscal and distributional implications of property tax reforms in Indian cities," Somik V. Lall and Uwe Deichmann, Economic and Political Weekly, July 22, 3209-20, 2006.
The property tax is an important local revenue source in many countries, but is often underused as a source for financing local expenditures. This paper examines the fiscal and distributional implication of ongoing and potential assessment reforms in two Indian cities, Bangalore and Pune. While our findings are specific to these two cases, the reform efforts and underlying problems are representative of most urban local governments. Reform efforts that bring assessment of the property tax base closer to market values have significant positive impacts on revenue generation and do not have adverse consequences in terms of the tax burden faced by the poor. While current assessment reforms are a good first step, structural issues such as improved valuation, increasing buoyancy of the tax, and building taxpayer confidence need to be addressed to make these reforms sustainable.
| | | What factors influence community participation in the delivery of urban services?
This study shows that tenure security has a significant impact on the willingness of residents to participate even when neighborhoods are diverse in terms of their cultural background and welfare status. These findings suggest that participation is possible in heterogeneous communities when participation is a means to a common objective and not a goal by itself. - "Tenure, diversity, and commitment: Community participation for urban service provision," Somik V. Lall, Uwe Deichmann, Mattias Lundberg, and Nazmul Chaudhury, Journal of Development Studies, 40, 3:1-26, 2004. (Based on World Bank Policy Research Working Paper 2862.)
What factors influence community participation in the delivery of urban services? In particular, does security of tenure enhance the probability of participation as it provides individuals with incentives to act collectively in pursuit of a common objective? In addition, are collective efforts less likely to succeed when there is a high degree of heterogeneity in culture or endowments among community members? We use household level survey data for Bangalore, India, to show that tenure security has a significant impact on the willingness of residents to participate even when neighbourhoods are diverse in terms of their cultural background and welfare status. Our findings suggest that participation is possible in heterogeneous communities when participation is a means to a common objective and not a goal in itself.
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Detailed city-level household surveys improve urban policy analysis
The task of urban managers is to ensure the provision of basic urban services and an environment conducive to economic growth, while maintaining fiscal sustainability of city operations. City managers in developing countries face increasing pressure in achieving these goals due to rapid urbanization, fiscal and administrative decentralization, and the economic challenges of globalization. Based on experience in Bangalore, India, this paper argues that effective, forward-looking urban management requires a much better information infrastructure than is currently available in most cities. (See project documents below) | | | | Project documents | | | | Households surveys | |
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