Water Week 2011 Challenges of Urbanization for Water and Sanitation Infrastructure The Cost Effects of a Lack of Spatial Planning The World Bank 1

Introduction and Characteristics of Urban Development Ownership characteristics Property marketability and transferability Retail financial sector / willingness to lend State of urban services = characteristics of urban development 2

Impressions of Maseru Difficult to draw conclusions about Maseru and environs Some limited planning; some haphazard growth Some “leapfrog” development Mix of housing quality Variable road quality Variable services 3

Urbanization Formal definitions: – Densification – Conversion of use In practice: the addition of new residents Sprawl – Both a cause and consequence of a lack of planning 4

Urban Services Scope of services – Core: roads and paths, water and sanitation, solid waste management, public lighting – Social: schools, health clinics, space for places of worship – Amenities: parks, places for civic gathering, playgrounds Provision of (and financing of) services – Indirect taxation – Direct taxation 5

Costs of Unplanned Sprawl Additional costs to residents: – Time and monetary costs for transportation and for water – Reduced mobility – Poor safety and security – (unclear costs with respect to electricity and solid waste management) Additional costs to service providers for later retrofitting – Particularly high for water and sanitation services 6

Some incidental benefits of sprawl Density (or lack of density) means that existing sanitation is acceptable – Health effects of poor sanitation are relatively minor A visible mix in the quality of housing = neighborhoods are not limited to a single income level 7

Measuring the Value of Services Measure the value of serviced land vs. unserviced land – In a competitive property market, this is the value that society places on those services This may or may not be a good approximation of the cost of providing those services In Maseru, cost > value – Accept the state of affairs (and wait…), or – Work to reduce the costs of providing services 8

Planning for Growth Planning ahead for growth: – Not easy – Good human capacity – Transparent, enforceable land-use regulations – Credible and transparent way to convert land from non-urban to urban uses – Easily transferable land rights 9

Financing Infrastructure How is new infrastructure financed? – Does the larger community pay (taxes on existing residents to provide services to new residents)? – Do residents of the new community pay? Development Charges = entry fee for urban services – Easiest when you have greenfield and organized development – Still possible when there are multiple owners – Even still possible for servicing in-situ 10

Costs, Choices, and Trade-Offs Development charges make explicit the cost of providing services Too expensive? There is a choice: – Wait another 10 or 20 years for someone else to pay for services – Organize and pay for services that you can enjoy now and that increases the value of the property 11

The Case of Water Supply Water and sanitation is the most difficult and expensive infrastructure to provide WASCo is one of the better utilities in Africa, but it doesn’t generate enough excess funds through existing tariffs to pay for major network extensions It can’t “pre-invest” in new development areas without up-front capital 12

Sources of funding for water infrastructure Central government or local authority – to service a specific industrial or residential development Outside donors – to provide services to underserved areas, at concessional rates Formal real estate developers? Effectively paying development charges to pay for the cost of extending services Organized communities? Pooling or raising funds to pay for the cost of extending services 13

Questions? 14

Thank you 15