1. An Anticommons Tragedy: Romania’s Housing Privatization
Robert Buckley
Ashna Mathema
Land and Poverty Conference | World Bank | March 2017

2. Is housing privatization in Romania a “Tragedy”? …….Seems far-fetched.

3. Romania has interesting buildings…
Casa Scanteia
Stalinist high-rise building
Seven such buildings in Moscow
Also in Bucharest, Prague, Riga, and Warsaw

4. Romania has interesting buildings…
Casa Poporului
One of the largest buildings in the world
30,000 homes, many synagogues and churches destroyed for its construction in center of Bucharest
Road leading to it was a little longer than the Champs-Elysees

5. Actually, Romania has many beautiful buildings…

6. …Besides beautiful buildings, reforms seem to have been helpful
Romania has the world’s highest share of privately owned housing, and the lowest share of mortgage debt
It changed from largest percentage of public housing stock in Europe to the largest privately owned stock – with individual decision-making
One would think that these conditions would provide the basis for a well- functioning housing market….unfortunately, that is not the case.

7. In fact, Romania has some of the worst housing conditions in the EU
Highest share of households with extreme rent burdens – two to three times higher than EU average
The smallest housing units – half the size – compared to other former socialist/communist countries
Low mobility compared to other reforming economies – less than one-eighth of others.
Boulevard Magheru, Bucharest’s Champs Elysees

8. So…. what happened?
Privatization was supposed to create markets that, in turn, would allocate resources effectively
And better owner-renter/ condo laws would improve things, as suggested by two major studies by the EU and Gov. of Romania
But these arguments don’t explain the run-down nature of the stock, the high costs, and low mobility.

9. What happened is a “Tragedy of the Anticommons”
A Tragedy of the Commons, as is well-known, is when too many people have rights to use a property so that it becomes depleted due to overuse
A Tragedy of the Anticommons is the opposite – too many people have rights to control a property – making it impossible to use or maintain effectively. The result is the same as the commons tragedy: the value of the asset is destroyed.

10. Tragedy: Really?
Most of the so-called tragedies of the commons and the anti-commons, for that matter, are interesting stories but not accurate or lasting
For example, the tragedy of the commons was avoided by clever ways of arranging use of common areas.
Similarly, the anti-commons tragedy, for example in Moscow, is now resolved.

11. So why has Romania not been able to address this Tragedy?
Romania has the largest share of multi-story urban buildings of any reforming economy
Complex nature of housing ownership inherited from the old regime
If ownership rights are considered along a spectrum, rather than as having just two qualities – either public or private – Romania’s housing rights are excessively fragmented
Because repurposing and renovation of buildings require negotiations between residents, it is harder to do - Can’t get agreement about how to repurpose buildings on valuable sites or to share costs on less valuable ones

12. So why has Romania not been able to address this Tragedy?
Inefficient structure of cities
Unlike the structure of cities in market economies or even other reforming economies
Like those of the FSU: Moscow, Yerevan, St. Petersburg
Like other Utopian Cities: e.g. in South Africa, Brasilia, and a few others, as shown by Bertaud
Moscow and Paris
Cluj, Romania

13. So why has Romania not been able to address this Tragedy?
Inability to repurpose land and property
High cost of transportation, commuting time, and energy making the value of some locations zero or lower
The demise of some industries resulting in some city locations being of relatively much lower value than other places
Inability to repurpose high-vale locations – e.g. Boulevard Magheru

14. So why has Romania not been able to address this Tragedy?
Locations of Romanian cities and locations of buildings within cities were not driven by resource costs or locational advantages. Many locations are no longer valuable.
Central planning regime located cities to eliminate difference in wages between city and countryside – not voting with feet, voting with fixed investments
Development of “mono-cities”, with severe restrictions on movement of goods and services between places
Use of internal passports to enforce central rather than individual locational choices

15. Is that a Tragedy?
As long as attention is given just the individual units and not to property rights with respect to the fabric of the buildings, it is a tragedy…

16. Cities constructed without land markets have…
Low housing mobility, which has adverse consequences for economic growth and the ability to realize agglomeration economies
Much higher commuting and infrastructure costs – e.g. difference between Paris and Moscow
And, they lose one of the key values of cities – agglomeration economies, which underpin some theories of economic growth…

17. THANK YOU