Doing Bad by Doing Good? An Empirical Analysis of the Incentives from Informal Settlements’ Upgrading Programs on Urban Informality

Abstract

This paper has two different aims. First, we investigate the effects of informal settlements upgrading programs through a systematic review synthesizing the information provided by evaluations of such programs in Latin America. Based on the analysis of 38 program documents from 1998 to 2016, the review provides evidence that, in all the interventions, the best results are obtained from infrastructure upgrading (sanitation and road accessibility). What are the failures? Urban integration and accessibility to the neighborhood is improved in some interventions, but the indicators used are inadequate to measure the actual degree of urban integration. On titling, the result is negligible in scale in all interventions. Environmental problems appear to be slightly reduced. What are the main gaps? There is still the need to measure the long-term effects of upgrading interventions and to shed further light on urban effects. The second aim of this study is to assess the role of upgrading interventions in Metropolitan Buenos Aires using an empirical identification strategy and an innovative data base. The context analyzed presents substantial spatial variation in upgrading interventions and formal-informal housing dynamics. The model is intended to assess whether informality is exacerbated by upgrading interventions when there is insufficient absorptive capacity of the formal housing sector because of the land use regulatory environment.