In designing upgrading programs, and particularly when scaling-up, there is a need to have an understanding of the socio-economic situation of the communities that will be affected. Poverty Assessments can be specially designed to assess the situation of the urban poor in particular countries and/or cities, which would enable project teams to know how the affected communities fit into the larger city-wide situation of poverty. Information on communities’ capacity and willingness to pay is also a critical input into designing an effective and affordable project. Beyond the collection of information, there is a need to take into account the ability of individuals in these communities to mobilize non-monetary assets such as social capital, and how they can protect existing assets and build on those assets.
There is also a need to understand external factors affecting the lives of these communities, such as violence, crime, gangs and how to use the community itself to organize responses to those problems. Similarly, the daily issues of living and working in communities and within the city for the poorest of poor (mostly women) all require special attention. In many of these communities, the lack of employment and underemployment is a major issue, and are often the root cause of some of the other social issues such as violence and crime. All these areas of action need to be considered in a larger scale program.
However, not every upgrading project can, nor should, directly address each of these issues. It is clear that linkages to other city-wide services, where available, would allow or facilitate access to other programs. Likewise, there are particular cases like street children, which cannot be easily accommodated within an upgrading project, but national or city-wide program would need to take into consideration how to attend to these special needs. It should be kept in mind that, while upgrading projects cannot deal with all these socio-economic issues, it is likely that a community which is organized around an upgrading effort is more likely to be able to participate actively or seek help from other service agencies to address these problems.
Unserviced settlements or so-called slums, where many of the urban poor live in unhealthful and degrading conditions, represent a microcosm of urban policy problems. This note reviews the economic issues involved in the design and implementation of programs that aim to address the needs of the residents (and especially the poor residents) of such unserviced settlements. The note starts with the basic question, “What are the roles of markets and of governments in ensuring essential urban services, in particular for low income settlements?” This question provides the basis for identifying the scope for public and private action. This first part of the paper then proceeds to explore the problem of how to assess demand by a mixed beneficiary population (residents of a geographic-based urban settlement, who may represent a range of income levels, household types, and preferences) for various urban services that span the continuum of public to private goods. The second part of the paper then discusses institutional arrangements for supplying such mixed public-private goods in response to residents’ demands. This section discusses issues of the conventional provision of urban services through public utilities or other formal suppliers (what may be called “single-sector” approaches). It then looks at the policy issues to be addressed in providing multiple services as a package to given geographic settlements, through scaled-up programs for so-called “urban upgrading”.