Diego Gil Mc Cawley World Bank Land and Poverty Conference March 2017

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Presentation transcript:

Diego Gil Mc Cawley World Bank Land and Poverty Conference March 2017 LAW AND Inclusive URBAN DEVELOPMENT: LESSONS FROM CHILE’S enabling markets HOUSING POLICY REGIME Diego Gil Mc Cawley World Bank Land and Poverty Conference March 2017

The Problem

International Trends in Housing Policy Increasing focus on ”inclusionary housing” Transition from government to markets: the “enabling markets” housing policy approach

Research Question Is the enabling markets approach a good policy strategy to provide adequate housing solutions to the urban poor?

Case Study: Chile’s Market-Based Housing Policy (1973 to Present) Pioneer of the enabling markets approach Focused on the delivery of targeted subsidies for homeownership Expansive social policy Dramatic reduction of housing deficit in recent decades Today: small number of families living in irregular settlements

Adoption of Chile’s Market-Based Model Established during dictatorship in the mid 1970s as part of larger package of neoliberal reforms Rationale was to adopt a regime based on stimulating a competitive market for affordable housing Core institutional component was the implementation of a complex system of subsidy programs aimed at promoting homeownership Complemented by policies that deregulated Chile’s urban land market

Implementation: No. of subsidies delivered per type of program (1990-2015)

Implementation: Amount in dollars spent per type of subsidy program (1990-2014)

Outcomes: Reduction of Housing Deficit (OECD 2012)

Outcomes: The Spatial Bias Location of housing projects constructed through the subsidy programs for low-income households between 2006 and 2014 (Techo 2015) Location of subsidized housing projects constructed between 1980 and 2003 in Santiago (Tapia 2011)

Lesson 1: Urban Integration as a Critical Goal Bajos de Mena, Puente Alto, Santiago, 122,278 inhabitants

Lesson 2: Limitations of Strategy Based on Targeted Subsidies The institutional structure of all subsidy programs has not been able to incentivize the supply of affordable housing in well-located neighborhoods In the 1990s, government favored the rapid increase in the supply of low-income housing through direct contracts with private sector Since the early 2000s, the regime has functioned more clearly as a demand-side subsidy regime. However, and despite significant increases in their price, households carrying subsidies are almost never capable of penetrating well-located neighborhoods

Lesson 2 (cont.): The Experience of the Special Subsidy for Location Supplemental voucher implemented in the mid 2000s that the housing market internalized soon after implementation Problems of institutional design: uniform increase in the price of the subsidy plus most urban areas met the requirements Lesson: uniform increases in price of vouchers does not necessarily lead to better locations

Lesson 3: Linking Housing Policy with Land Use Governance Exclusive institutional focus placed on subsidy programs has been a good strategy for expanding access to formal housing, but not to promote inclusionary housing The need of a planning housing markets approach: “So that [generating affordable housing in well-located neighborhoods] no longer has to do, from my point of view, with what housing policy can do on its own, but rather with what, in a larger context, the Ministry is also responsible for, which is urban policy, or land use policy, if you prefer. That [policy], somehow, could have certain regulatory components, I will not say regulating directly the price nor establishing it, but to have some instruments that could allow a more balanced structure of prices, one that could allow housing location alternatives to become more balanced(...).”(Telephone Interview with mid-level official from the Ministry of Housing, April 2013).

Diego Gil Mc Cawley World Bank Land and Poverty Conference March 2017 LAW AND Inclusive URBAN DEVELOPMENT: LESSONS FROM CHILE’S enabling markets HOUSING POLICY REGIME Diego Gil Mc Cawley World Bank Land and Poverty Conference March 2017