97834 DIRECTIONS IN URBAN DEVELOPMENT MAY 2015 Urbanization Trends in Bolivia: Opportunities and Challenges rural areas, cities are experiencing increased pressure Overview to meet increased demand for public services, a higher costs associated with congestion, increased crime or Bolivia is a rapidly urbanizing country whose population higher levels of pollutants in air and water. is concentrated in large metropolitan areas. Although Bolivia’s urbanization process started relatively late, the This note is a summary of a report that considers urban country has been rapidly approaching the urbanization areas as the complement to rural areas that will allow levels of other Southern American countries. Between the Plurinational State of Bolivia to achieve the goals 1950 and 2012, its urban population grew at an annual set forth in its Patriotic Agenda for the Bicentennial rate of 3.7%, almost five times as fast as population 2025. The report uses data available at the national level growth in rural areas. While in 1990 just over half of the from censuses and household surveys from the National population lived in cities, in 2012 two thirds of Bolivians Statistics Institute (INE) and the Social and Economic lived in an urban areas and according to UN estimates, Policy Analysis Unit of the Ministry of Development nearly 75% of the population will be urban by 2025 (UN, Planning (UDAPE) to provide a first approximation to: 2012).1 The urbanization process has been accompanied (i) identify opportunities that urban areas present to by the concentration of population, particularly in achieve the objectives of the Patriotic Agenda regarding the three major metropolitan areas: nearly 50% of the country’s population lives in the metropolitan areas of La Paz-El Alto, Cochabamba, and Santa Cruz that form the axis of urban development in Bolivia; another 12% live in one of the 33 cities with more than 20,000 inhabitants.2 As elsewhere, the urbanization process in Bolivia presents challenges and opportunities. Not only population but also economic activities are typically concentrated in cities. Cities provide a number of advantages that attract both businesses and workers to urban areas, such as commercial/trade links in the production chain, the size of the labor market, the concentration of skills and knowledge, innovation, and the stock of physical capital. At the same time, cities face multiple challenges associated with urban sprawl and density. With the expansion of urban areas resulting from natural population growth and migration from La Paz, Bolivia. Credit: World Bank This note was prepared by Zoe Elena Trohanis, Bontje Marie Zangerling and Javier Sanchez-Reaza. It is a summary of a longer tech- nical paper, drafted in Spanish, which was prepared by a World Bank team led by Ms. Trohanis. The authors would like to express their appreciation to the Plurinational State of Bolivia’s Ministry of Development Planning, Ministry of Autonomy, INEI and UDAPE. GLOBAL PROGRAMS UNIT | MAY 2015 DIRECTIONS IN URBAN DEVELOPMENT Figure 1. Percentage of urban population in regional com- Urban to supplement the 2025 Bicentennial parison 1950-2025 Patriotic Agenda Cities are emerging as an effective vehicle to achieve the objectives that the Patriotic Agenda for the Bicentennial 2025 proposes in terms of poverty reduction and universal provision of basic services. An important trend that the report identifies is the internal migration from rural to urban areas stimulated by the perception that cities represent opportunities for higher incomes and a better quality of life compared to rural areas. These shifts have led to a marked increase in the urban population. One third of Bolivia’s total population (2.6 million people) has migrated to cities from 2006 to 2011, of which a third came from a rural environment. The incentives for migrants are clear: higher incomes and access to basic services, precisely two of the pillars Source: Prepared using data from UN World Urbanization Prospects 2011. of the Patriotic Agenda for the Bicentennial 2025. The analysis shows that migrants have substantially improved their income levels. The overall increase the reduction of poverty and universal coverage of in real income per capita between 2005 and 2011, basic services; (ii) understand and overcome the especially among the poorest in urban areas, challenges that the expansion of urban areas present, suggests the existence of an inclusive growth process and understand the growth dynamics of different that has benefited the poorest groups in Bolivia. In types of cities; (iii) review the institutional framework addition, this work also shows that the provision of and planning tools currently available for urban basic services in urban areas has been improving as development; and (iv) provide suggestions for future a result of the efforts and investments of municipal analysis. However, due to limitations of the available governments, notably in the last ten years. It is noted data, the report does not include an economic analysis that the provision of services in urban areas with higher of urban areas nor an in-depth analysis of issues at city population density is typically more cost-effective for level. It is expected that the results of the report can both provider companies and local governments than inform the projects that the Government of Bolivia providing services to remote and sparsely populated is developing and implementing in cooperation with areas. the World Bank and other partners, such as improving national data, urban labor markets, poverty and However, migration to cities also entails challenges informality, and investment for infrastructure in cities. in terms of informality in employment. The diagnosis Figure 2. Population growth and urbanization in Bolivia Source: Prepared using census data from INE. 2 MAY 2015 Figure 3. Average real income (in Bolivianos) in urban and Figure 4. Poverty incidence and gap in urban and rural rural areas, 1999-2011 areas, 1999-2011 Source: Prepared based on Household Survey data from INE. Source: Prepared based on Household Survey data from INE. indicates that cities predominantly attract young and municipal governments regarding: (a) land-use people; one of the direct economic benefits for cities planning, (b) provision of basic services, and (c) is that their labor markets grow more than their governance and institutional capacity. population, implying that urban areas could become more attractive for investment. However, this The growth of urban areas essentially reflects a process disproportionate growth of labor force also resulted in of suburbanization. Since 1990, smaller cities in Bolivia the growth of informal employment. This phenomenon are growing faster than the big cities in terms of popula- could become a challenge in the future as young people tion and area. Particularly, the rapid population growth continue to migrate to the cities and work informally. in small and medium cities close to Cochabamba and Santa Cruz stands out—over the last decade, these Urban expansion — challenges and opportuni- cities grew at an average rate of over 8% and 7% respec- ties of cities in transition tively. On the other hand, the population of major cities (La Paz, El Alto, Cochabamba, and Santa Cruz) grew two The growing expansion of urban areas—together with to three times more slowly, and their surface areas also the recent decentralization process—has brought grew more slowly, experiencing increasing population along challenges and opportunities for both national densities. These demographic and spatial dynamics Figure 5. Annual population growth in the three Metropolitan Areas between 1992 and 2012 Source: Prepared based on census data from INE. 3 DIRECTIONS IN URBAN DEVELOPMENT resulted in a process of suburbanization characterized The rapid low-density expansion of urban areas can by rapidly growing small cities on the outskirts of big result in higher infrastructure costs for the delivery of cities that form new functional metropolitan areas. basic services and affect environmental sustainability. Secondary cities that are not located in the hinterland of Local governments face a potential degradation of these metropolitan areas, such as Sucre, Riberalta, and urban environments as a result of insufficient sanitation Tarija, have usually experienced low-density expansion coverage paired with a lack of wastewater treatment. as the population growth has started to slow during In addition, the use of unregulated septic tanks could the last decade. As various types of cities in Bolivia have exacerbate the problem. Some of the consequences experienced different types of spatial expansion and that Bolivia could face include pollution of surface and population growth trends, different urban management groundwater given the lack of solid waste collection strategies will be needed to ensure sustainable growth or sewage treatment, as well as air pollution. The in the future. Government of Bolivia could consider fostering greater population densification through the use of fiscal instruments and urban planning to take advantage of Figure 6. Conurbation in the Cochabamba Region, 1990 - 2010. economies of scale for service delivery. Institutional framework and planning tools for urban development The challenges of urban planning, service delivery, and disaster risk management that cities face today could be addressed through institutional adjustments to improve governance and promote capacity building at the local level. The decentralization process at the local level is a relatively recent phenomenon that started in 1994 with the adoption of the Law of Popular Participation No. 1551 and was consolidated with the adoption of the Constitution of 2009 and the Framework Law of Autonomy and Decentralization "Andrés Ibañez" in 2010. This set of laws provides the decentralization framework that delegates the responsibility for provision and financing of public services and Source: Own elaboration based on satellite data. infrastructure to municipalities and stipulates citizen participation in service delivery decisions. The decentralization process resulted in an increase in the The expansion of cities into high-risk areas presents a number of municipalities from 24 in 1994 to 339 in challenge for public policy. Although disaster risks exist 2012. With this development emerged the institutional in both urban and rural areas, the expansion of cities challenge of coordination between various levels of into hazard prone areas increases the risk exposure of government and between local authorities in the same numerous urban dwellers. The inhabitants of many of metropolitan area, as well as increasing technical and these settlements are even more vulnerable to such financial capacity of local governments for territorial disasters given their poverty and housing conditions. planning and urban management. The following topics For instance, the expansion of La Paz in recent decades are of particular importance: has been concentrated in areas with slopes greater than • There are some shared and concurrent powers 20 degrees, which increases the risk exposure of its between different levels of government that can population to landslides and creates the need for major lead to duplication of mandates and / or needs of investments in mitigation measures and vulnerability coordination between actors at different levels. reduction. This example also shows the importance of carrying out a more detailed analysis of natural hazards • Often, the instruments of development planning and potential impacts of climate change at the local and budgeting, such as land and housing cadasters, level. assessments of land and housing markets, and data collection at the local level, are not used Urbanization presents an opportunity to provide basic effectively by municipalities. This often is a result services which Bolivia could address through better of capacity constraints at the municipal level, lack urban planning. of coordination between various instruments, local pressures, and community interests, amongst other things. 4 MAY 2015 Figure 7. Coverage of potable water provided by public service utility in 22 cities (%). Source: Prepared based on census data from INE. Figure 8. Coverage of sanitary sewage in 22 cities (%). Source: Prepared based on census data from INE. 5 DIRECTIONS IN URBAN DEVELOPMENT Another opportunity is to deepen the discussion on how to operationalize municipal associations and con- solidate metropolitan areas. Sub-national administra- tive divisions usually seek to consolidate a territorial order allowing governments to exercise control over a specific territory and agglomeration that present similar economic, cultural, ecological, and functional characteristics. Many challenges related to urbaniza- tion are not confined to administrative boundaries, such as water supply, urban transport, or environmental management. Therefore, it is imperative to consider functional urban areas and develop mechanisms for coordination between the various sub-national enti- ties and institutionalize a degree of supra- municipal governance to promote strategic actions for functional La Paz, Bolivia. Credit: World Bank areas. This is particularly important as the management and organization of these areas is becoming more com- • Reviewing methods of operationalization of plex over time as the relationships between conurba- municipal associations and consolidation of tions or development poles are intensified through the metropolitan areas focusing on La Paz/El Alto, exchange of goods and services or the mobility of its Santa Cruz, and/or Cochabamba. The Government inhabitants. could start with the coordination in metropolitan areas where municipalities could exploit Some recommendations and suggestions for economies of scale in infrastructure provision future analysis that emerge from the report across administrative boundaries in key issues at the sectoral level, such as transportation and solid The Government of Bolivia could take steps to waste management. The activities should include maximize the potential economic and social benefits all the municipalities involved as well as active of urbanization in order to promote poverty reduction, participation of the regional government. social inclusion and prosperity for all Bolivians. • Concentrating the financial support and capacity Considering the results of this diagnosis, the following building efforts on small and medium-sized strategic areas of actions and ideas for future work/ cities that are growing at a fast pace and face analysis are presented as options for the consideration the challenge of achieving universal coverage of the Government of Bolivia. Although all of these of basic services for existing residents as well as areas are important, it is suggested to sequence the new migrants in a more sustainable way for the actions the government could take in the short, medium environment; this could include the expansion of and long term. neighborhood improvement programs in Bolivian In the short term, the government may focus on: cities. • Creating databases at the city level. The types of In the medium term, the actions described above could data that could be included in these databases be complemented with the following: include the general characterization of the • Reviewing planning and investment tools for cities population, the growth and formation of gross to improve their implementation and use. The types domestic product, service provision coverage, of instruments include Land Use Plans, Annual infrastructure, transport, land use and cadaster, and Operating Plans, Municipal Development Plans, etc. data on vulnerability to natural hazards. • Developing a strategic training plan to build • Conducting assessments of land and housing institutional capacity and technical ability of markets in major cities such as La Paz, Santa city officials to implement the various laws, Cruz and Cochabamba, where urban centers policies and regulations, enforce land use plans are densifying. These evaluations are needed to and other planning documents, and to oversee increase productivity and improve the efficiency the infrastructure construction. The creation of of land use. Assessments can determine: (i) actual networks of municipal officials and mayors, and land use, (ii) mechanisms to provide housing and provision of targeted training programs are key in services for areas with less coverage, (iii) how to this process. improve zoning and risk reduction, and (iv) plan land use at the municipal and metropolitan levels in In the long run, it is recommended to conduct urban the medium and long term. sector analysis with an integrated view of how cities 6 MAY 2015 are linked and are part of a system of cities in the challenges demand quick action and invite not only country to better understand how cities’ contribution governments but also the private sector and communi- to national development could be increased. Such a ties to actively participate in finding solutions that allow system could be structured from a set of settlements people to live in more sustainable territories, more com- and urban areas, considering the characteristics of petitive and innovative economies, and more inclusive physical expansion, the coverage and quality of basic and prosperous societies. services, economic functions of cities according to the specialization of the region, and the systems that con- nect the territory (road systems, communication, and transportation). The interaction of these components is what represents the system of cities and, at the same time, is the subject of public policy intervention End Notes in the territory and private sector actions to incorpo- 1 United Nations, Department of Economic and Social Affairs, rate urban centers in the development process. Population Division (2012). World Urbanization Prospects, the 2011 Revision, Final Report with Annex Tables. New York, USA. As part of this analysis, one could investigate how cit- 2 La Paz, El Alto, Santa Cruz, Cochabamba, Oruro, Sucre, Tarija, ies contribute to economic growth in Bolivia and how Potosí, Sacaba, Montero, Trinidad, Quillacollo, Yacuiba, Riberalta, all cities could be a vehicle for regional development Colcapirhua, Guayaramerin, Viacha, Villazon, Tiquipaya, Camiri, and support to rural development. Both the cities of Bermejo, Tupiza, Cobija, Llallagua, Warnes, La Guardia, Vinto, El Palmar, El Torno, Villamontes, Cotoca, San Ignacio de Velasco and metropolitan areas as well as secondary cities that are Huanuni (the full report includes details on the demographic develop- not part of the axis of metropolitan areas represent ment in these cities since 1976). a valuable opportunity to promote socio-economic development both at the national and regional level. In this context, one could analyze how urban areas serve as a market for agricultural goods from sur- rounding rural areas that in turn benefit from urban jobs as well as finished goods and services from cities. The links between rural and urban areas are reflected by the interdependence of commodities and natural resources on the one hand, and those essential ser- vices, such as education and health, that would be very expensive to provide in each rural settlement on the other. In addition, the analysis could further examine issues such as labor markets, poverty, com- petitiveness, innovation, and changes in demograph- ics and social structure of cities when people are migrating from rural areas. Given the speed with which urban areas are growing in Bolivia, political leaders have to respond in a more efficient, more innovative and more coordinated way to address citizens’ problems and challenges. New in Urban Development Copies of this Note are available at: Global Programs Unit; Social, Urban, Rural and Resilience Global Practice; The World Bank Telephone: 202-473-3222, Fax: 202-522-3232 http://www.worldbank.org/urban DIRECTIONS urbaninfo@worldbank.org If you are interested in submitting an article for consideration, please contact us at the email address above. The views expressed in DIRECTIONS in Urban Development are those of the authors and do not necessarily reflect the views of the World Bank. 7