(FORMALIZING) INFORMAL HOUSING: addressing the elephant in the room Victor Endo and Luis Triveño The 18th Annual World Bank Conference on Land and Poverty, March 20-24, 2017 Washington DC

Informal settlements at global scale 1 billion people live in slums or informal settlements 2.5 billion in 2020 LAC : 30% families live in slums Nicaragua 78% Bolivia 75 % (double the regional average) Peru 72%

Informal settlements are vulnerable Settlements occupy unsuitable areas Steep hillsides Flood prone areas landfills Homes built without license – no control of structural steadiness Peru: If a 8.0 degree earthquake hits Peru, 80 % of potential economic losses would involve housing From 1990 - 2011, minimum losses in the housing sector for 16 countries in LAC were estimated to be US$53 billion

The challenge How to apply risk reduction measures How financing ? After the buildings have been constructed? Without identification of landowner? How financing ? Peru 1999 – 2014 public investment in housing USD$ 3,300 Million Minimum value of new housing needed in 2015 USD$ 34,000 Million

The Peruvian context Urban formalization programs since 1990’s 2004 Urban formalization programs since 1990’s 2.5 million urban registered titles Formalization of soil only (not buildings) Reversion to informality (40%) Weak urban cadasters 2017 2010

So, how to invest in risk reduction? Formalizarion of title Formalization of building Retrofit / housing improvement A menu of combined formalization + retrofit products Realign the incentives of homeowners and authorities by: mapping the existing risk in housing stock combining private and public resources to mitigate the risk when possible

Targetet formalization+retrofit solutions Protocolization of title from private registered owner Issuing title by public owner Repairing absence of material title Cure title by adverse possesion Simplified notarial processe Typologies of informal tenure reinforcenment of masonry walls with size of section deficiency reinforcement of concrete columns reinforcement of existing column shoe inclusion of concrete walls from existing columns Typologies of vulnerable housing A relevant analogy for the proposed solution can be found in the use of nanotechnology in biological research (manipulating properties and structures at the nanoscale, often involving dimensions that are just tiny fractions of the width of the human hair) for the development of targeted drug therapies or “smart drugs”. Instead of traditional chemotherapy that sweeps good and bad cells, targeted drug therapies are designed to operate on specific cells and have already shown to cause fewer side effects

A process for targeted formalization-retrofit solutions Characterization of risk at micro-scale Needs identification at plot level Design of interventions Use of available data to classify areas within settlements: Seismic vulnerability studies Formalization plans Municipal tax rolls Water, electricity plans Socio-economic data Risk-oriented cadastral survey Tenure typology Risk typology Incremental implementation: 2 stages Targeted interventions, examples: Subsidy packages for integrated formalization + retrofit Low-cost regularization of tenure + building by private actors Urban densification / rental mkt

Expected outcomes Risk mitigation Incentives for private investment in retrofit Better public sector risk management policies Incorporating informal assets in the market Impulse to densification policies Improve rental market Increasing tax revenues and land management capabilities result, lives could be saved and eventually assets could be preserved, reducing significantly the government’s contingent liability. This solution is relevant for homeowners that aspire to a regularized property to protect it and transfer it to future generations or to take out economic benefit from it. The proposed scheme could also help government to leverage private resources (Peruvian households invest in housing in one year what housing programs invest in more than one decade) to mitigate a risk for which they do not have coverage. It is worth noting that because of its private nature, governments tend to have coverages only for public assets (like schools, hospitals, airports, etc).

GRACIAS ! www.landalliance.org

Combining existing data Product: reference base map for field inspection

Plot level needs identification Risk-oriented cadastral survey: low cost and scalable process Second stage, in-depth risk assessment produces “certificate of risk inspection” collection of tenure data First stage, external verification using reference base map