Alain Bertaud on "Top Down Design vs. Spontaneous Order: Impact on Housing Affordability" recently attended a conference at NYU hosted by the Development Research Institute and the Marron Institute of Urban Management on "Cities and Development: Urban Determinants of Success." This is the final post of our four-part series reporting on the event.

The spatial structure of large cities is a mix of top-down design and spontaneous order determined by the market. In his talk at the Cities and Development conference, Alain Bertaud argued that although top-down design is indispensable for establishing city-wide primary infrastructure, the city planners' urge to control often goes too far. At the neighborhood level, he explained, cities need spontaneity.

Bertaud pointed to Hanoi for an example of efficient market-driven use of space. The city's tall and narrow buildings exist because of the high demand for floor space in the context of high costs of assembling multiple plots of land in order to build wider buildings. The solution of tall and narrow buildings meets Hanoi's needs, and there is no reason for top-down design to prevent this.

Yet planners do encroach constantly on market-driven city neighborhoods. Sometimes, if there is room for new or altered infrastructure, they encroach directly through master plans. In other occasions, they encroach on market forces indirectly by imposing regulations that require housing to meet minimum size standards. This policy often claims to expand affordable housing, but critics of these regulations point out that anyone who cannot afford the minimum size housing will be forced to turn to illegal settlements. They will not only be poor, but illegal too.

Returning to Hanoi, Bertaud described the city’s urban villages as having an elastic supply of low-cost housing. Planners are involved in developing the city's primary infrastructure network, but they design it to serve spontaneous housing settlements, leaving the neighborhood-level questions open to market forces. Combined with the government's provision of schools and services, this approach to urban space has allowed Hanoi to be almost slum-free.

In contrast, Cairo offers an example of an ambitious master plan gone awry. The plan called for the development of new satellite cities, up to 100 kilometers away from central Cairo, with carefully thought-out mandated minimum housing standards. Many urban dwellers, however, could not afford homes that met these government-mandated minimums. Some of these residents moved instead to agricultural plots only seven kilometers from the city center, forming huge informal settlements that are inaccessible to cars and that impede the delivery of government services.

Cairo serves as a warning that minimum housing standards do not make housing more affordable or prevent slum formation. Instead, they exclude the poor and make their lives more difficult and precarious as they seek illegal alternatives. For Bertaud, top-down design at the level of housing and neighborhoods risks such undesired outcomes; accordingly, city planners should instead focus on metropolitan-wide infrastructure, leaving neighborhoods free to develop spontaneously.

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