Box.1.5 Urban Land Pooling and Land Readjustment

BOX 1.5

Urban Land Pooling and Land Readjustment

Urban land pooling and land readjustment are innovative techniques for managing and fi nancing urban land development. Local and central governments are applying such techniques to assemble and convert rural land parcels in selected urban fringe areas into planned road layouts, public utility lines, public open spaces, and serviced building plots. Some of the plots are sold for cost recovery, and the other plots are distributed to landowners in exchange for rural land parcels. For viability, the value of the urban plots distributed to landowners after subdivision needs to be signifi cantly higher than the value of the plots before the project begins.

In a typical project, the authorized land pooling and readjustment agency selects and designates the urban fringe area to be developed and identifi es the land parcels and owners to be included. A draft scheme is then prepared to plan, defi ne, and explain the project and demonstrate fi nancial viability.

Majority landowner support for each proposed project is a key requirement for the successful application of the technique and is therefore an important consideration in selecting project sites. Although the emphasis is on landowner agreement and support for each proposed project, the land pooling and readjustment agency must also be able and willing to use the government power of compulsory purchase against any minority holdout landowners in the designated project area if this becomes necessary.

Source: Mehta and Dastur (2008).

The sharing of project costs and benefi ts among the landowners, such as increased land values, is based on their contributions of land to the project. The calculation of each landowner’s share may be based on the area of his or her land parcel relative to the total land area or on the estimated market value of the land relative to the estimated market value of the total area.

There is an important legal difference between land pooling and land readjustment in landownership. In a land pooling project, land is legally consolidated by transferring the ownership of the separate land parcels to the land pooling agency. Later, the ownership of most new building plots is transferred back to the landowners. In a land readjustment project, the land parcels are only notionally consolidated, and the land readjustment agency has the right to design services and subdivide them on a unifi ed basis. Then, at the end of the project, the landowners exchange their land parcel title documents for the corresponding documents of the new building plots.

There are many successful examples of such projects, for instance, in Indonesia, Japan, and the Republic of Korea. A similar process of land pooling and land readjustment is practiced in the state of Gujarat in India, where the projects are known as town planning schemes. (See fi gures 1.26 and 1.27, which illustrate the before and after scenarios of land readjustment in Gujarat.)

usually fall into two categories: retrofi tting and redevelopment. Retrofi tting existing city areas entails working with the existing built stock and infrastructure and making improvements to enhance performance, without redeveloping the entire area. Examples of retrofi tting measures include implementing end use effi ciency in the energy and water sector; reducing, reusing, and recycling waste; and adapting existing transportation infrastructure (roads) to more effi cient uses (for instance, by designating routes for bus rapid transit and lanes for bicycles).

Redevelopment entails demolishing and rebuilding certain areas of the city and is typically more complicated. Redevelopment is challenging because of the political, social, and economic costs of making changes in existing land uses and structures. New zoning or transportation corridors cannot be imposed unilaterally or quickly. Nor is it easy to upgrade the systems serving so many unconnected buildings. Many stakeholders must participate in decision making. Projects require longer time frames so that communities may adjust. An incremental approach may be required, which makes the sequencing of strategies diffi cult. Development may need to include, for example, complex arrangements for slum upgrading and arrangements for new utilities and rightsof-way. The pace of change may need to evolve incrementally in sync with the natural turnover rate for the stocks, or it may be necessary to wait until the service quality and operating costs justify large-scale urban redevelopment.

However, cities may explore creative and cost-eff ective ways of remodeling the distribu-