Substack

Saturday, November 10, 2007

Why cities die?

Declining cities get trapped in a vortex of self fulfilling prophecies. Investments and jobs fall, resulting in a drop in incomes and spending, thereby generating a negative feedback of income and economic decline. This turns away the more well off and attracts the poorer, and so on, thereby triggering off another negative feedback loop of social degeneration. How do these cities get out of this poverty trap? What is the role of Government in such situations?

A similar logic applies to the Old Town areas of many of our cities. Having failed to keep pace with the requirements of the modern economy, these areas start declining. This in turn sets off a vicious cycle of falling land and rental values (relative to the other areas), thereby attracting the poorer residents. Slowly these areas develop slum like characteristics, and degenerate into oblivion. Crime and violence follows soon, and the downward spiral gathers pace.

Old Town streets and roads are typically narrower and are marked by perpetual traffic congestion. The absence or poor enforcement of zoning and building regulations in those times have resulted in buildings packed cheek-by-jowl with a riotous manifestation of mixed residential and commercial usages. Most of these buildings are old, located on small land holdings and with little or no open space. Given the stringent setbacks and parking requirements, there is limited possibility of reconstruction in such small landholdings without consolidation.

Further, the old and declining areas attract hawkers and street vendors for two reasons. First, their cheaper products have a bigger and more willing market in these areas. Second, they find cheaper accomodation in such areas. Given the poor public transport and the large commuting times, the attraction of a work place closer to their homes is invaluable. The presence of hawkers and street vendors in turn attracts more of them and the cycle builds up, converting areas into hawker markets. Hawkers invariably end up occupying road margins and vital junction spaces, thereby further reducing the road carriageway and exacerbating the traffic problems.

For historical and other reasons, old town areas are also the trading centers of a City. These locations are characterized by wholesale shops and large godowns. This in turn generates employment for headload workers, laborers, and push cart and other transport vehicle drivers. Given the availability of cheaper accommodation and the need to live close to their workplaces due to their odd working hours (Given the restrictions on entry of heavy vehicles to the City during daytime, most trading logistics have to be operated in the night), these people end up residing in the Old Town area itself.

Some element of demographic dynamics is also at work in promoting the decline of these areas. A disproportionately high share of households in the older areas of many Indian cities consist of joint families living in these old houses. Those joint families whose members have moved away, divides the accommodation into small portions and leases it out, so as to maximize their rental incomes. That the major demand is from the poorer migrant working families helps. Such social cultures encourage the development of large numbers of small scale economic activities, that invariably get located on the street margins. For example, the large number of families in each house and the lack of space, means that street side food vendors are patronized.

Harvard Professor, Edward Glaeser has chronicled the dramatic decline of the City of Buffalo from its pre-war era pomp, as one of the leading cities of US. In Can Buffalo ever come back?, he claims that cities fall into poverty because of relocation of industry and drop in labor demand, and declining areas becoming magnets for poor people attracted by cheaper housing. "The influx of the poor reinforces a city’s downward spiral, since it drives up public expenditures while doing little to expand the local tax base."

Prof Glaeser also argues that many old cities managed to stave off their decline through investments in the promotion of human capital. He writes,
"The cities that bounced back did so thanks to smart entrepreneurs, who figured out new ways for their cities to thrive. The share of the population possessing college degrees in the 1970s is the best predictor of which northeastern and midwestern cities have done well since then."

Vijayawada as a whole and different areas within the City have many learnings from Prof Glaeser's study. Being a major center for trading and other services, Vijayawada attracts a substantial number of migrant population. Over the years, the City's development has driven a very distinct wedge between the newer Patamata and Governorpeta areas and the Old Town area. While the former has propsered and is fast accquiring all the trappings of modernity and prosperity, the latter has been on a slow decline, which threatens to fall into an uncontrolled downward spiral. (or it may be waiting for the appropriate downward tipping point!) Apart from other socio-economic and political factors, massive Government investments in civic infrastructure has contributed in no small measure to the development of the newer areas. It has provided them with atleast the basic facilities required to attract migrants and the newer residents of the City.

Government policies may have unwittingly exacerbated the divide by relocating numerous slums and encroachments from these areas to the Old Town and Ajith Singh Nagar areas, which have in turn become more slummified. This may have occurred due to the scarcity of vacant Government lands in the newer areas and the availability of such lands in the Ajit Singh Nagar side. Further, given the much higher land values in the newer areas, utilizing these areas for resettling slums will have very high opportunity costs. This divide has been so internalized and subliminally institutionalized that all encroachment relocations today are invariably to these areas. There are only a couple of slums in the newer areas of the City and these too have been provided with all the basic civic infrastructure.

Good quality basic civic serices like water supply, sewerage, sanitation, and transport are today one of the primary pre-requisites for attracting residents. The best indicator of this trend is seen by the increasing differential in rents between areas with such facilities and those deficient in them. Wide roads and good transport facilities play a crucial role in enhancing the economic utility of any area. The newer areas of Vijayawada have benefitted enormously from road widenings, which have set in motion a chain of regeneration and renewal activities in the economy.

Prof Glaeser also brings out numerous examples of failures of massive Government investments in infrastructure in these failing cities, and drives home the ineffectiveness of such responses alone in stemming migration and the attendant decline. It is something similar to good money thrown in after bad money!

Policy makers have an interesting dilemma here. Investments in infrastructure are necessary and are the basic pre-requisite for giving these declining cities and areas, atleast the slightest chance of a revival. Choking off that opportunity would be the surest way of ringing thier death knell. But it is also true that many investments, especially in transport infrastructure end up being white elephants or being disproportionate to the need and requirements. Many modern infrastructure investments require a critical mass of consumer base who can afford to pay for its use. But declining and poorer areas of a City cannot muster this critical mass, thereby necessitating Government support. In any case investments in mega infrastructure projects require more rigorous due diligence and cost-benefit analysis and most importantly, substantial private sector participation for its sustainability and success.

But merely developing good civic infrastructure will only help attract those newer migrants to Vijayawada to such areas, but will not by itself contribute towards attracting migrants to the City. Similarly, massive investments in human physical capital will by itself not be able to stave off a decline. Both are necessary pre-requisites, they are not by themselves sufficient. While basic civic infrastructure is necessary to sustain a regeneration or redevelopment of the City or area, development of human physical capital is the major ingredient in incubating a regeneration.

As we have seen, a number of social, demographic and economic forces are in operation in declining areas of any City. Any effort in reviving these areas will have to account for these forces. There cannot be simple tailor made solutions. Road widenings can be useful in triggering off some of these activities and redeveloping these areas. Government policies making it mandatory to bring down very old buildings, coupled with policies incentivizing consolidation of holdings can promote redevelopment in these areas.

Government intervention is necessary to catalyse private investment in both physical infrastructure and human capital. Very often policy makers tend to get carried away by the mega infrastructure projects, and make masssive investments in one or two projects in the belief that it can regenerate old and declining cities. But as the Glaeser study shows, the world is littered with similar mega investments which have failed to achieve the objective. Further, in the absence of investments in human capital to develop local entrepreneurial skills, no amount of investments in physical infrastructure can prevent the decline of cities.

6 comments:

gaddeswarup said...

Some uninformed comments. My impression is that Vijayawada is more of a trading centre than an industrial centre; for example Mumbai is both ( I studied in Vijayawada from 1954 to 56 and so this is very old knowledge.) Do you think that more industry near vijayawada may have some effect. During my student days, it was felt that the whole region from Vijaywada to Guntur would become a big industrial complex. My impression is that few started but did not thrive for some reason or other. An acquintance in Chennai commented that this is probably due to left's hold on laboutr there. In spite of some prosperty due to Agriculture and may be IT earnings from home and abroad, industries do not seem to have prospered in that area. Growth of industies may bring new dimensions to the questions you mentioned.

Sudheer Dhurjati said...

"Road widenings can be useful in triggering off some of these activities and redeveloping these areas. "

I've been in London, worked in Central London for a long time, worked in other European towns and cities, that are very old, believe me the roads there are as narrow as the roads in one town, and governorpet. They do not go and demolish the buildings, like our civic bodies do. Why is that?

Urbanomics said...

Why London and European cities, even Manhattan does not have 120 ft roads! The issue is not road widenings. Our old town streets and roads are populated more by other economic agents than by vehicles. In fact the carriageways have become extensions of shopping areas. In London and New York, at least the carriage way is intact. The road is being utilised for the purpose it was built for! Further, unlike old London or old Milan, very few of our old cities have been touched by even the rudiments of town planning.

Just look at the Old Town in Vijayawada, and all the aforementioned becomes clear. Over the two years, I have observed Vijayawada, while the remaining parts of the city has undergone substantial commercial renewal and redevelopment, One Town has remained immune. I can't think of any siginificant new commercial or economic activity having taken ground in this part of the city.

I am sure you will not dispute my contention that "wide roads and good transport facilities play a crucial role in enhancing the economic utility of any area." Except for one or two, the entire One Twon does not have any road which is even 30 ft. It is necessary to atleast develop reasonably good ingress roads to these areas for them to pick up on any economic activity.

I am not saying wide roads can be achieved only by road widenings - clearing the carriageway can help! Nor am I saying all our old buildings need to be pulled down. But this does not mean that none of our old buildings need to be left intact!

Urbanomics said...

Why London and European cities, even Manhattan does not have 120 ft roads! The issue is not road widenings. Our old town streets and roads are populated more by other economic agents than by vehicles. In fact the carriageways have become extensions of shopping areas. In London and New York, at least the carriage way is intact. The road is being utilised for the purpose it was built for! Further, unlike old London or old Milan, very few of our old cities have been touched by even the rudiments of town planning.

Just look at the Old Town in Vijayawada, and all the aforementioned becomes clear. Over the two years, I have observed Vijayawada, while the remaining parts of the city has undergone substantial commercial renewal and redevelopment, One Town has remained immune. I can't think of any siginificant new commercial or economic activity having taken ground in this part of the city.

I am sure you will not dispute my contention that "wide roads and good transport facilities play a crucial role in enhancing the economic utility of any area." Except for one or two, the entire One Twon does not have any road which is even 30 ft. It is necessary to atleast develop reasonably good ingress roads to these areas for them to pick up on any economic activity.

I am not saying wide roads can be achieved only by road widenings - clearing the carriageway can help! Nor am I saying all our old buildings need to be pulled down. But this does not mean that none of our old buildings need to be left intact!

Sudheer Dhurjati said...

You are right with your points reg One Town.

The best planned parts of Vijayawada is II Town, [and few parts of Gandhi Nagar?]. I think these were planned by the british governors - Arundel and few others?

My grand father, a renowned Lawyer in Viajayawada used to tell us, that Surya Rao Pet was probably the end of the town during the days of Indian Independence. There used to be small villages, colleges outside the city, but were considered outside of town.

Now my question is, who planned the town between Suryarao Pet and Ring Road? Who approved the layouts? Who gave permissions to shops?

I may sound a little ciritical when I say, that town planning in India is a myth.


Is Urban Renewal a euphemism for correcting the errors in town planning.

Urbanomics said...

Wrong facts! Patamata was planned entirely by VMC, and very recently, and it is probably the best planned area of the City. Most of the colonies are best examples of planned development anywhere. The worst planned are the old town and some of the older parts of Town II, which were planned long back. (I have no idea who did it) All approved layouts in Vijayawada (an I am talking about every single one) are farily OK. The problem is that there are a few unapproved ones, which are often confused for approved ones.

Vijayawada is 60 sqkm, population 12-15 lakhs (depending on where you draw the stats from), and houses 1.75 lakhs. There are exactly 8 Building Inspectors, or 1 per 7.5 sq km or 1 per 22,000 structures, supervising all the town planning activites on the field. (The entire VMC Town Planning Division, including the City Planner and office staff, is only 23) Now, it does not require any great insight to know that it is impossible to enforce regulations with such thin presence. The same is true elsewhere.

But the main problems are not with major violations, but the following
1. Every (sic) construction in our cities have deviations. You can just check even yours with the approved plan. I am convinced that this is because the house owners try to maximize their floor area by occupying beyond the permissible setbacks.
2. Many road side houses encroach into the road margins by either constructing walls, structures or more commonly with ramps etc.
3. Shops invariably have no parking and their customers use the road margins for parking.
4. With apartment fees being much higher than that for individual houses, many builders find it highly remunerative to take plans for G+2 or G+3 individual house and then illegally convert them into multi-unit house.
5. There is nothing wrong with the width of many of our internal roads. But the problem here is that only half or so of the carriage way is available for traffic. The rest is encroached by various agents - hawkers, parking, and construction.

I call them negative externalities, and have written about them in previous posts. These things cannot, repeat cannot, be physically policed without the presence of large field supervision. And I am not in favor of such supervision, because it has other more debilitating dimensions. As long as demand side inclinations to deviate remains strong, no amount of regulatory innterventions can help. I will make a post on town planning soon.

And yes, Urban Renewal can also rectify some of the defects of unplanned growth, like in I town!