Road widenings are always resisted by the land owners who lose their lands and supported by outsiders who benefit by way of wider roads. However, the story goes beyond such simple descriptions. Unfortunately there have been very few detailed studies, analyzing the consequences of such widenings across cities. Most often the debate on road widenings, confined as they are to traffic related issues, miss a whole gamut of other dimensions.
Wide roads are most often seen as a solution to the traffic problems of modern day cities. It is presumed that wider carriage ways accommodate more number of vehicles and hence reduce traffic congestion. But it is not as simple as this. Economists often refer to the Say's Law, which postulates that supply creates its own demand. Similarly, wider carriageways soon gets occupied by more and more vehicles and get congested, and we get back to square one! But the traffic dimension apart, road widenings have very important economic and social consequences.
The majority of road widenings are along the major roads in the city. They involve acquiring valuable lands and demolishing portions of very old structures, thereby effectively rendering the structures unfit for habitation. Instead of making financial compensation for the lands acquired, many Corporations have adopted policies transferring equivalent amounts of Floor Area Ratios (FAR) in lieu of the land surrendered for road widenings. This coupled with certain relaxations in setbacks, helps the land owner build up more floor space, despite the reduced land size. These FARs are therefore extremely valuable for big developers of commercial and institutional space.
Chennai and Hyderabad, are interesting cases for comparison. There have been massive road widenings in Hyderabad over the past few years, while Chennai roads have remained more or less the same. This can partly be explained by the fact that Hyderabad had narrower roads and hence there was a need to expand road widths, whereas Chennai already had reasonably wider roads. Interestingly, despite the massive road widenings, the traffic in Hyderabad has if anything worsened!
Most the major 100 ft and more roads in Hyderabad have been widened in the past decade. Subsequently, these road margins have witnessed unprecedented urban renewal, by way of large number of new developments. Old buildings have been pulled down, and massive new commercial and business spaces built up, utilizing the FAR bonds allotted. This re-development opportunity has spawned a huge boom in retailing and investment in institutional and office spaces, thereby attracting private companies to set up their corporate offices. The old shops and establishments have been replaced with shopping malls and commercial complexes with their glassy and gleaming facades. These complexes have multi-tier parking facilities, thereby providing for huge parking spaces. There have been numerous instances of fragmented land holdings been amalgamated, so as to make optimum use of the allocated FAR Bonds.
In contrast, the main roads in Chennai have not experienced this regeneration. The major roads continue to be inhabited by a large number of the old, small, family-owned businesses and traders. In many major roads, the same establishments have been running for decades, and re-development is minimal. Land continues to be fragmented, and carriage way encroachment for parking is common. In fact, most of the demand for new institutional and corporate office space in Chennai has been met in the Software Parks and other Institutional enclaves developed on the City margins. (It is of course debatable as to whether this relocation and concentration of such functional spaces in specific areas, instead of being located within the City alongside the main roads, is to be encouraged)
It makes for little economic sense to under-utilize valuable stretches of land alongside major roads for small and petty business activities. Most often businesses are run on single or two storied small buildings, thereby failing to make optimum use of the scarce and valuable land. This is not to decry the importance of such small and petty businesses, but a very convincing case can be made out for locating them in the smaller, internal roads. Such zoning would leave the main roads open for unrestricted flow of traffic.
A preliminary analysis of the statistics from one particular road-widening in Vijayawada City, throws up certain very interesting conclusions, validating most of the afore-mentioned arguments. The MG Road in Vijayawada is a 3.5 km long road, with 187 properties covering an extent of 1,49,024 sq yards, adjoining it. A massive road widening program was taken up on MG Road in January 2006 and completed in June 2007. The entire road stretch is a prime commercial district of the City, with thickly built-up area. But during and after the widening, there have been a large number of re-developments along this road. Existing structures have been pulled down and new high-rise structures are coming up. Significant number of smaller and fragmented properties have been purchased and consolidated into single plot by developers.
Of the 187 properties, 44 covering an extent of 60,169 sq yards have been razed down for re-development. To put in perspective, this covers 40% of the total land adjoining the road. In other words, a single road widening activity has sparked off urban renewal over 40% of an existing built up area. The figure of 40% is estimated to touch atleast 75% over the next two years. Land values in this road have surged, (also due to other factors) touching Rs 80000 to Rs 1 lakh range for a square yard, atleast a 50% increase in the past year.
Road widenings are therefore excellent examples of Governement catalysed, but not imposed urban renewal. The process of demolition of old buildings, sales transactions, amalgamation of land holdings, redevelopment of properties and opening of new businesses are all market driven, with the widening program and its associated policy instruments like FAR Bonds providing the external stimulus for these developments. Such widenings and the consequent renewals provide the large commercial developers opportunites to step in and redevelop existing, under-utilized lands. This process results in the maximization of the total economic surplus and draws out the full willingness to pay. Developers placing the highest value on such locations and therefore willing to pay the highest amounts move into these areas, while the sellers get the best value for their lands and retire to invest or live elsewhere.
9 comments:
Some questions, not in any particular sequence:
1. Why does Hyd have bad traffic despite road widening - could the nature of renewal catalysed by road widening have had anything to do with it.
2. Who is to say that smaller businesses are less valuable than malls? what about urban character, architecture and form? what about people displaced from their businesses?
3. Where are the FAR bonds or TDRs sunk? Isn't TDR like creating paper money - in the same space, more built up area results.
This post appears to have caused some strong reactions. At the very outset, I have my strong reservations about road widenings (and this is clearly disclosed in the post itself) as a panacea for our traffic problems. The solution to that clearly lies elsewhere - better public transport, one ways, pedestrain zones, congestion pricing, erstrictions on private vehicles (I have a post on this, http://gulzar05.blogspot.com/2007/09/why-1-lakh-car-is-not-smart-economics.html) etc. The purpose of the post was only to bring out an economic dimension of such road widenings. It is a framework for analysis.
Increasing traffic and resultant traffic congestion are inevitable negative externalities arising out of economic growth. Every city has or is going through this and will have to find the solution in the aforementioned bouquet of options. It could be interesting if someone could study how much of the traffic congestion in say, the stretch from Panjagutta to Secunderabad Road, is due to the commercial spaces that have emerged as a consequence of the road widening. My guess is that it is likely to be small. (Just observe the traffic during the office hours)
I am not offerring any judgement on smaller business being more or less valuable than malls. But it is surely economically efficient if a Rs 1 lakh per square yard land is used for an economic activity that generates Rs 10 lakh per day (or provides 10 jobs) than one that generates Rs 1000 per day. Yes, though urban character, architecture and form are important and need to be enforced through our town planning regulations, they are no where in our priority list. In fact there are no specific regulations on them. Over and above the land acquisition policies, the more practical approaches are case-to-case negotiations. The role of the market itself is not to be under-estimated (road widenings immediately increases land values and land consolidation).
I see nothing wrong in more built up area coming in the same space. It is in fact a paper money. In fact, given modern construction technolgies, it is safer and easier to construct more floor area in the same land, than previously.
In fact, I think FAR is an excellent option for the land loser. If in the absence of the FAR, he would have been able to construct x sqft, with the FAR he will be able to construct x+y sqft. With the possibility of trading FARs, even those not able to make use of the FARs allotted can trade it.
A few practical observations about road widenings. It has been observed that most land owners along roads taken up for road widening, typically lose a sliver of land along the length of the land. Wherever this sliver is vacant, it is left so due to setback regulations and the land owner cannot make any economically productive use of this land (it is also true that he may be using it as a garden or for parking). Such people benefit enormously by FARs in so far as it straight away gives additional economically valuable floor space, than would otherwise have been possible. In case of those who lose a portion of their structures, it has been found that the majority lose their balconies, staircases, porticoes, or bathrooms. They too benefit by way of FAR bonds and TDRs. Further, a substantial number of structures are in deviation of the individual building plan and Master Plan (in place at the time of construction of the building) requirements, and ought to be removed in any case. Those who lose a significant portion of their structures are a small proportion. It is this category that needs generous assistance.
Finally, one would do well to keep in mind the fact that road widenings are ultimately one of the steps involved in implementation of the City Master Plan! If our constructions were in accordance with the Master Plan, there would be no need for road widenings!
I've posted many messages [very reactionary ones], putting myself in the shoes of a tax payee. I deleted them later, when I realized that I was attacking a person and not the problem, and agree few of my posts were inappropriate for this blog.
After reading your clarifications, actually, am, a little relieved and hopeful that we still have good administrators, who have good insight of the problem and are diligent in what they do.
On the one hand we need to move forward, correct the damage done in the past, On the other , move away from reactionary approaches, such as Road-Widening, al be it we call it part of a Master Plan.
The overall issue is a complex one for the householder. For VMC its a project, for the house owner its different. I'ts too complex for a househodler to solve the larger problem, and be part of the solution, as there are appointed civic bodies, to insure a better town for every citizen, which have failed and continue to disappoint the citizens.
Earnestly, appreciate, all the efforts of the recent comissioners of Vijayawada, who have changed the face of the city, and Gulzar, you too share a large part of this credit. Most Vijayawadaians are proud of you.
Dont worry about our unloving comments, Honestly, we need more administrators like you, and belive us, though some times we agree to disagree, we believe in good leaders like you!
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