Resource information
Urban growth throughout the developing
world has created a challenge for financing infrastructure.
Investment in infrastructure is needed to provide basic
services for newly developed parts of urban areas. It is
needed to meet the demand for a safer and more reliable
water supply, higher standards for the removal and treatment
of wastewater and solid waste, and the transportation
requirements of a population whose expectations of mobility
rise with household incomes. Infrastructure investment also
is essential to the economic productivity of cities. This
book examines an important additional option for local
infrastructure finance: capturing land value gains for
public investment. Land values are highly sensitive to
infrastructure investment and urban economic growth. Public
works projects such as road construction, water supply, and
mass transit investment produce benefits that are
immediately capitalized into surrounding land values. Many
cities in developing countries have underused public lands
that would be more valuable if sold and converted into
infrastructure assets. Tapping land values was a large part
of the investment strategy of Western countries in financing
urban infrastructure during the 19th century, when cities
were growing most rapidly. As part of the overall financing
mix, using land assets for infrastructure finance has
several advantages. Most instruments of this type generate
revenues upfront, making it easier to finance lumpy
investment projects. Mobilizing finance from land
transactions also generates price signals that increase the
efficiency of urban land markets and help rationalize the
urban development pattern.
