Land Pooling/Land Readjustment An Alternative to Compulsory Acquisition

M03: What Policy Goals Can Land Readjustment Achieve, and Under What Conditions?

Overview

This Module will discuss the policy goals that land readjustment can achieve under various conditions. Conventional
wisdom has predicted some preconditions for adopting land readjustment. We will examine these preconditions
based on evidence gathered from selected case studies mentioned in Module 2. We will distinguish which
requirements are myths, and which are realities. The re‐examination of these preconditions will help us strategize
the application of land readjustment in developing country contexts.

What Policy Goals?

First, please let us recall what policy goals land readjustment can achieve.

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M03: What Policy Goals Can Land Readjustment Achieve, and Under What Conditions?

Attainable Policy Goals

Scholars and analysts alike believe that, in principle, land readjustment can achieve five policy goals:

First, land readjustment can increase development densities in accordance with the master plan to make room for
urban expansion and revitalization, thereby obtaining land space for infrastructure investment and services,
including open and green areas. There may be cases where the density is already high or residents do not want to
increase density further, thereby making infrastructure investment more challenging. A key component of land
readjustment is re‐plotting, so as to deal with fragmented landownership that can increase the costs of land
assembly and infrastructure construction. Although not all communities like their neighborhoods to be subdivided
into some grid patterns, the arrangement on the right‐hand side of this slide does represent a more efficient use of
scarce land resources. Households that have surplus land will be encouraged to put vacant space into productive
uses. More importantly, land reconfiguration will also make space for widening roads and the construction of public
parks and other community facilities. The neighborhood arrangement on the left‐hand side may prohibit fire trucks
from going into the neighborhood if there is a fire. Widening the local roads by land readjustment can mediate this
safety issue without exercising the government’s power of eminent domain (or compulsory purchase).

Second, land readjustment can also create the opportunities for the local government to implement its updated
master plan. The location of the proposed schools and medical centers or hospitals could be incorporated into the
re‐subdivision plan. All landowners in the neighborhood will be asked to contribute a portion of their landholding
for the construction of these public facilities. By comparison, using compulsory purchase would put most of the
burden on households whose property happens to be at the location where the public facilities will be built.

Third, a very important aspect that separates land readjustment from other approaches is that it empowers the
landowners to decide on the redevelopment initiative. In most land readjustment projects, the proposal will require
the consent of the supermajority of the landowners. The threshold varies from 51 to 100 percent depending on the
country. In Japan, private land readjustment projects need approval from at least two thirds of the affected
landowners (or land ownership). In Bhutan, although the rule requires agreement from two‐third of landowners,
local governments attempt to seek an unanimous agreement from landowners in their land readjustment projects.
Also, a cooperative or community corporation with members of the management team elected by the community
will also provide ample chance for all stakeholders to be involved in the design, implementation, and monitoring of
the project. Thus land readjustment is relatively more participatory than other land development approaches, if
implementing agencies do not overlook the significance of public participation. More importantly, land
readjustment aims to minimize relocation of existing residents by returning a piece of serviced land to the
participating landowners to rebuild their homes after the completion of the project. This can help avoid forced
eviction and allow landowners to share all future redevelopment benefits with the municipality and other
stakeholders.
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M03: What Policy Goals Can Land Readjustment Achieve, and Under What Conditions?

Fourth, because land readjustment emphasizes public participation and community engagement, it is a useful tool to
foster social learning for building local governance. This is an invaluable feature of land readjustment because not
only does it improve the living conditions of the residents, but it also helps build community and collective actions.
Through an intensive engagement of the community in every operation of land readjustment, members will learn
their rights and responsibilities in the development process, allowing them to understand others’ preferences and
priorities. This understanding will help stakeholders to accommodate each other's needs and come to a consensus
on how they should redevelop their neighborhood collectively. This collective action could be the foundation of a
workable local governance structure that encourages and enables residents to take ownership of the land
redevelopment efforts that will require continuous maintenance and upgrading in the future.

Fifth, if the initiator of a land readjustment project decides to include infrastructure investment as a complement of
the initiative, land development along with local infrastructure provisions entails capital investments. Some
municipalities in both developed and developing countries may not have the fiscal capacity to undertake these
projects. In this case, the initiator could use two approaches. They could either use land readjustment to obtain land
for the right‐of‐ways and then invest in the actual local infrastructure in the future when capital is available.
Alternatively, a unique feature of land readjustment is to capture land value increments to recover development
costs. This objective is achieved by reserving land space for sale through the revision of land subdivision. In
balancing the need for land for public roads and facilities and the financing of construction of this public
infrastructure, the implementing agency will ask landowners to give up additional land that will be pooled together
into developable plots for sale at market value. The sale revenue from these land plots will then be used to defray
part of the project costs. In principle, if the estimated land revenue generated from participating owners’ land
contribution matched perfectly with the costs of land readjustment, the project could be self‐financing. In practice,
however, self‐financing is hard to achieve because the matching could be complicated by the lack of reliable
information or, most significantly, the resistance from landowners to give up a large percentage of their landholding
to finance the project. Thus central or local governments may need to help the project financially. At the minimum,
the idea of reserving land for sale to recover some of the development costs can lower the burden or dependency on
public finances.

It will be unrealistic to state that all these objectives can be achieved simultaneously, at all times and in all places. In
some situations, the attainment of one goal may be at the expense of another. For instance, if the priority of the
land readjustment project is to reserve ample land space for public roads and social housing, less land will be
available for sale to recover the redevelopment costs. We can certainly mediate this tradeoff by increasing the
development densities of the area. Yet the amount of human and economic activities that an area can
accommodate is not unlimited, thus rendering this method nonviable in densely populated areas. Other tradeoffs
may emerge depending on varying contexts. Hence, it is important to keep in mind that these attainable policy goals
are suggestive. What is most important is to establish an open and inclusive decision making process to allow the
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affected stakeholders to identify potential tradeoffs in accordance with the unique circumstance of the project at
hand. Only through open and informed discussions can affected parties resolve some of the inherent tradeoffs
based on their agreed upon priorities.

Myths & Realities

Based on the experiences of conducting land readjustment in developed countries, scholars and analysts alike have
proposed a set of preconditions for adopting this land tool. Since these preconditions play some role in determining
the adoptability of land readjustment in industrialized nations, many analysts consider it impossible to apply similar
techniques in developing countries because these conditions do not exist. However, as we will explain later, none of
the preconditions for land readjustment are fixed naturally such that developing nations will never be able to
develop them in their countries. In the remainder of this Module, we will analyze these arguments, separating the
myths from the realities. This will help us provide better suggestions for adopting land readjustment in some
developing countries.

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It is essential to state at the onset that our observations are based on the research on recent land readjustment,
pooling, or sharing practices and experiments in eleven countries including Angola, Bhutan, China, Chile, Colombia,
Ethiopia, Egypt, India, Iraq, Thailand, and Turkey. There are certainly many other experiences around the world;
however, we cannot cover them all here. Thus, we would like to limit our arguments to these selected countries and
avoid any generalizations.

Myth No. 1

Many scholars and analysts alike have argued that countries need land readjustment legislation prior to adopting
this approach. A prime reason is to empower an implementing agency to legally take land from dissenting
landowners when the supermajority of their neighbors have agreed to participate, in order to avoid holdout.

In principle, having some legal rules to guide the operations of land readjustment is a good idea. Yet the procedure
for establishing new laws in most developing countries is very long and politically driven. Legislators are often
unwilling to take the risk of formalizing rules for a new practice that has no precedent in their countries. The

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potential complications and risks of proposing a special law for land readjustment have deterred many developing
countries from experimenting with the idea.

Myth No. 1 – The Reality

Interestingly, we learned from the selected land‐readjustment experiences in developing countries that not having
special legislation did not hinder implementation of the idea. Examples include Angola, Bhutan, China, and Ethiopia.
In testing the transferability of land readjustment to their country, project initiators did not try to work with their
legislators to establish a special law first. Instead, they started with some pilot projects and then gradually
institutionalized the locally generated experiences into some semi‐formal rules as more experiments were
conducted in different regions of their country. They also did not try to adopt a land readjustment law based on
other countries’ experiences. Rather, they learned from their own practices and then came up with enforceable
legislation to scale up the application of land readjustment.

In dealing with dissenting landowners, officials in these countries did not resort to their power of eminent domain.
Rather they worked hard to convince all landowners either to partake in the project or to transfer their properties to
the implementing agency with compensation. In Angola and China, project organizers used eminent domain only as
a threat to motivate dissenting landowners to come to the bargaining table. In Bhutan, local officials who were in
charge of land pooling in Thimphu worked tirelessly to have unanimous agreement from landowners before they
went forward with their land‐pooling proposal.

Although these land readjustment experiences were not governed by law, these countries were able to transfer their
knowledge learned from experimenting with land readjustment to more systematic formal rules and eventually
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institutionalized these experimental experiences into laws. These laws founded on domestic actual experiences are
most effective in guiding local practices.

In fact, having a pre‐existing law does not seem to help the design and implementation of land readjustment if the
legal provisions do not reflect the realities on the ground. Some countries have specified in their legislation the
landowners’ obligation of contributing a part of their landholding to accommodate the public infrastructure
construction in their neighborhood. The intention is to make the amount of land contribution explicit to affected
parties, thereby lowering the negotiation costs. For instance, the Egyptian government has stated in its Building Law
that landowners could be asked to give up as much as 20 percent of their land to make space available for the
construction of public roads and other necessary facilities. Landowners may also have to pay a betterment levy to
cover the related construction costs of public goods. Both India and Turkey have similar provisions to delimit
contributions from landowners.

Contrary to the original intent of these legal rules, they add constraints and complications to the negotiation
between the government and landowners. In some cases, because the supply of infrastructure has lagged far behind
demand, municipalities may need landowners to contribute a high percentage of their landholding to build the
necessary road network and facilities to serve the increasing population growth. Limiting landowners’ contributions
to an arbitrary percentage without any consideration of varying local contexts has created inefficiency. On one
hand, places with rapid growth are unable to get the amount of land needed to upgrade their provision of public
services. On the other hand, officials in areas that are under less development pressure may take more land from
owners than they need, leading to resistance from landowners and failure to implement the proposed project.
Ideally, the land contribution ratio for land readjustment should not be pre‐determined by the law. Instead it should
be the outcome of repeated discussions and negotiations between landowners and an implementing agency. It
should take into account factors such as local preferences, level of public infrastructure and amenities, specific land
and housing market conditions, as well as the proportion of development costs the project intends to recover. There
is no “one‐size‐fits‐all” land contribution ratio.

We are not implying that establishing legal rules for guiding the experimentation and adoption of land readjustment
is not useful. Laws always play a critical role in institutionalizing workable practices on the ground and help scale up
land readjustment when the approach has proven suitable for a country. The key message for developing countries
is to maintain a certain degree of flexibility with the rule of law when land readjustment is still going through its
experimental stage. In the next slide, we propose how laws could be conducive to land readjustment experiments.

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Myth No. 1 ‐ The Reality

Based on our examination of the eleven cases, we propose possible features of helpful legislation that supports
enabling land readjustment in developing countries.

First, it will be useful if there is a constitutional provision that recognizes land, and land value increments created by
public actions, as social assets. This constitutional order can set the expectation of private landowners that their
enjoyment of property rights entails obligations to fulfill the social functions of land. Put simply, when land is
needed for public purposes, private landowners must surrender their land for such undertaking with just
compensation. This is universally true around the world. The difference is the extent to which these public‐private
property rights relations are articulated in the law. For examples, the Brazilian City Statute and Colombian Law 388
have specified clearly, among other things, the social functions of land and the equitable distribution of benefits and
costs of urban development. Establishing similar legislations in countries where public officials are considering
adopting land readjustment could set the stage for the government to negotiate with private landowners for land
contributions to pay for public infrastructure investments. That said, we do not imply that countries where similar
constitutional provisions do not exist should amend their constitutions without careful consideration. In most
countries, a constitutional amendment is normally a very serious undertaking that entails a very long time period for
implementation. We recommend experimenting with these ideas incrementally first, and then convincing legislators
to change the laws.

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Second, in connection with the social functions of land, it will also be useful if there is a law that gives all citizens the
right to access to affordable land and housing. The equal right to shelter, like the rights to education and free
speech, is considered a basic human right that can give legitimacy to the government to ask landowners to share
their wealth with the society for assisting the low‐income groups. The project‐based redistributive function of land
ownership provided by land readjustment can help prevent political and social instability caused by unequal
distribution of land‐based wealth. More importantly, this law can set a guideline for government takings of private
property for public benefit only. That said, it is important to consider also the fiscal implications of giving all citizens
the right to access to affordable land and housing. Governments should try to balance the policy goals of helping the
poor to obtain affordable housing with the need to maintain fiscal health.

Myth No. 1 – The Reality

Another rule that can help achieve the goals of land readjustment is the legal requirement for seeking the consent of
the supermajority of affected landowners or occupants to approve the land readjustment proposal. As argued
earlier, a unique feature of land readjustment is its participatory mechanism for policy decision making.

Unfortunately, when adopting land readjustment, many countries have overlooked this special feature. As a result,
communities have lost their chances to learn how to make decisions collectively. Land readjustment projects that
lack the consent of affected owners are more coercive and controversial. Having a law that mandates the
implementing agency to obtain the consent of the supermajority of landowners to approve the proposal would avoid

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this problem. There is no universal threshold for the supermajority requirement. The percentage should be
determined based on local contexts and with adequate public consultations.

More importantly, if land readjustment is organized by landowners or the local community as a site‐level
intervention, the effort must be guided by updated national, regional, and local urban planning legislations to ensure
that similar micro‐level efforts can add up into a coherent whole. Enforceable detailed plans that are designed
based on an updated master plan and national and regional development strategies are indispensible for
coordinating land readjustment projects. If these planning functions are not well‐developed at the moment, land
readjustment projects should be at least guided by a generally agreed upon vision of land use in and around cities.

Myth No. 2

Another myth about land readjustment is that it requires a clear delineation of property rights. Some practitioners
believed that without knowing the ownership of land, the implementing agency will be unable to ascertain who has
the right to participate in land exchanges. In reality, clearly‐defined property rights are not always present in
developing countries. Current land users might have occupied land informally or do not register their land to avoid
high registration costs or the time‐consuming bureaucratic procedure. Many practitioners in the global south have
all too often dismissed the potential of land readjustment based on this reason.

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Myth No. 2 – The Reality

We did not find that unclear delineation of property rights was a major hindrance to adopting land readjustment in
Angola, Colombia, Ethiopia, and Thailand. These cases were all related to the upgrading of informal settlements.
The self‐settlers in some of these cases were driven to squat on public or private lands due to involuntary
displacements caused by wars and sectarian conflicts or by their inability to find affordable land and housing in
urban areas.

Governments in these cases recognized administratively the existence of the informal neighborhoods as part of
their jurisdictions. Informal settlers then verified their occupancy rights based on the knowledge of local
representatives and leaders or testimonies from their neighbors. The officially‐acknowledged and publicly‐certified
occupancy rights immediately protected informal settlers from forced eviction and entitled them to participate in
land pooling if they chose to do so. Recognition of occupancy rights is gaining a lot of momentum nowadays and is
generally done without any formal law. Instead, it builds on customary practices and is mostly dealt with at the
municipal level.

Certainly, these processes could only happen under a “flexible” property rights regime. A rigid property law that
only recognizes the rights of formal landowners could marginalize the landless in any land readjustment initiatives.
Because only the persons who hold title to the land can participate in the project, formal or informal renters and
occupants will be excluded from the decision‐making process. These parties are normally the most vulnerable and
represent the poorest of the poor who could not afford formal housing and must rent shelter from informal

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landlords. These marginalized groups will be displaced when their informal neighborhoods are upgraded. Some
redevelopment initiatives of urban villages in China are illustrative of this serious problem.

Myth No. 2 – The Reality

To avoid the problems indicated in the last slide, what would be the helpful legal perspectives on property rights that
could facilitate the application of land readjustment?

We suggest instituting a flexible legal framework that recognizes the diverse land tenure arrangements and property
claims of all residents, regardless of whether they are renters or property owners. The law should not just
acknowledge and protect registered freehold rights, but should also recognize formal and informal occupancy and
leasehold rights. Self‐settlers or renters who have resided in a neighborhood should be entitled to legal protection
from forced eviction. If relocation is inevitable due to redevelopment, occupants and tenants should have the right
to claim proper compensation.

All these changes in perspectives on property relations do not have to be covered in some major constitutional
amendments. Instead, they could be adopted by a government decree or executive order. Good examples of how
this approach works are found in the temporary administrative recognition of informal settlements by many
governments in Latin American countries and Thailand––which gradually led to the granting of fee simple or long‐
term leasehold rights through land readjustment (or sharing).

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Myth No. 3

It is generally true that land readjustment needs a vibrant real estate market to be implementable, because one of
its objectives is to mobilize land value increments generated by land redevelopment to finance infrastructure
investment and neighborhood improvements. If a project is carried out in a slow real estate market where the
demand for land and housing is weak, land value may not increase enough to provide sufficient incentive for
landowners and occupants to partake in the project or to cover the redevelopment costs. Certainly, if cost recovery
is not the primary objective, this matter is less important.

The fundamental operation of land readjustment is to incentivize landowners and occupants to exchange a piece of
un‐serviced land for another serviced plot of higher value, albeit smaller in size. The increase in land value after land
readjustment must be sufficient to compensate residents for their loss of land area during the exchange. Thus, a
vibrant real estate market will help encourage residents to participate in land readjustment.

That said, there are situations in which a vibrant land market may discourage landowners from partaking in land
readjustment projects. This happens mainly in industrialized countries where landowners find selling land to private
developers at a high price is more profitable and less risky than participating in land readjustment. Hence, once
again, the validity of the argument will depend on the context.

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Myth No. 3 – The Reality

Although it is true that most land readjustment projects need a vibrant real estate market to succeed, this condition
does not always benefit the poor. This is especially problematic when the landless are not included in sharing the
benefits of land readjustment. If generating high enough financial benefits for participating owners is the
dominating goal, there will be little incentive for the municipalities, the implementing agency, and other
stakeholders to keep land prices affordable. If there is no social program to protect the urban poor, housing could
become unaffordable for low‐ or even middle‐income households. Poor neighborhoods that offer a safe‐haven to
the poor will be gentrified, making affordable housing increasingly less available. An overheated housing market
may also create investment bubbles, threatening the stability of the entire economy. These problems have occurred
in Thailand, China, Egypt, Turkey, and India. That said, if land readjustment could be done at scale, it may increase
the supply of serviced land for residential development.

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Myth No. 3 – The Reality

To maintain housing affordability and lower the chance of gentrification, the government could mandate land
readjustment projects to reserve a certain portion of the serviced land for affordable housing. Alternatively, if the
implementing agency will build apartment units for existing landowners in return for their land contribution, the
government could ask the agency to sell or rent a certain percentage of the housing units to the poor at below
market value. This way, the renters and other vulnerable groups will not be priced out from the neighborhood after
land readjustment.

Certainly, implementing these proposals does not always occur without complications. First, they may require the
government to subsidize the project or to grant an extra density bonus to the developer to build housing units that
will be sold or rented below costs. The financial burden of providing affordable housing to the poor should not fall
entirely on the shoulder of landowners in the targeted area, because it is the responsibility of the entire population.
Second, the process of identifying the right persons who are qualified for the assistance is not trivial. Some people
who do not truly need help may take advantage of the system. Third, mixed income housing development may not
be attractive to would‐be homebuyers, thereby lowering the selling prices for the market‐rate units. Hence, to make
this proposal work, the mindset of the more affluent segments of the population needs to be changed, and the
construction materials for the affordable housing units should not be of lower quality simply because they are built
for the poor. Both approaches could minimize the chance of segregation.

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Myth No. 3 – The Reality

The market is a powerful institution for solving urbanization issues. Yet, it will not automatically help us achieve
social goals without proper designs. To make the market work for the poor, we need to ensure that all stakeholders
are market informed. There should not be a single interest group that monopolizes the access to the market or its
information.

Besides, all market participants, especially the poor, need to understand the financial risks of real estate investment.
Property prices are cyclical in the short run. There is no guarantee that investing one’s lifetime savings in real
property is the best way to store wealth. A possible strategy to allow the poor to accumulate equity, and at the
same time to protect them from the investment risks, is to form a housing cooperative, if the local context permits.
For example, in Sengki, Thailand, landowners and occupants shared their land for redevelopment, and the informal
settlers did not receive a title to the serviced land from the implementing agency after land sharing. Instead, they
became members of a cooperative managed by their community leader and other professionals with technical
support from the Thai and Dutch governments. Members of the cooperative started out renting their land at below
market value with the option to buy after five years of occupancy. This arrangement allowed the poor households
with limited financial resources to participate in land sharing while, at the same time, it precluded beneficiaries from
cashing in their land hastily, which would possibly have led to massive market displacement and gentrification of the
neighborhood.

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More importantly, real estate investment is complex and involves a large sum of capital. Investors, rich and poor,
need advice from the professionals. Hence, it is also important to have the government or another reputable entity
oversee the integrity and qualification of real estate brokers. They should act as neutral parties to lower the
transaction costs of buying and selling real assets. In Britain, estate surveyors are licensed property management
professionals whose qualifications and conduct are monitored by the Royal Institution of Chartered Surveyors. It is
also important to ensure that services provided by certified real estate brokers are accessible to the poor.

Myth No. 4

As discussed before, land readjustment generally requires the consent of the supermajority of the landowners (or
land users in cases of informal settlements) who must work together to design, implement, and supervise the
project. Many practitioners are concerned about the potentially huge negotiation costs involved in situations where
affected parties have little trust in each other and do not have any past experience of collective action. Thus, some
of them have concluded that members of the community must trust each other as well as the government (or the
project initiator) and have experience with participatory planning to render the adoption of land readjustment
viable.

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Myth No. 4 – The Reality

In the developing country cases that we examined, none of the communities displayed pre‐existing trust‐based
relationships prior to the introduction of land readjustment, except the Angolan cases. In Angola, Development
Workshop, a non‐governmental organization, worked with local communities for many years, even during the
wartime, thus gaining tremendous trust and respect from residents.

Project initiators in other examined cases did not pick their sites for implementing land readjustment based on the
level of trust and cohesiveness of the affected communities. In Bhutan, for instance, landowners were concerned
about their self‐interest as much as any other landowners in other parts of the world. It was only after public
officials had spent years of effort to convince every single landowner of the necessity of balancing self‐interest with
the community’s needs that they were willing to participate in the land pooling project.

In Ethiopia, city officials of Addis Ababa organized countless meetings to solicit inputs from affected slum dwellers
before designing their land readjustment project. Based on the opinions gathered from public meetings, they
formulated multiple housing options from which residents could select in reaction to the government proposal to
redevelop their neighborhood.

What these cases have shown is that land readjustment can be adopted in both organized and non‐organized
neighborhoods. Indeed more time and efforts will be needed to introduce land readjustment to a community where
neighbors do not know each other well. However, that is true for all instruments if we take the proposal of building
local governance as one of the key development goals. In fact, a well‐organized community should not be viewed as

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a precondition for adopting land readjustment. Rather, implementing agencies should view community organizing
as a key objective of land readjustment and develop neighborhood spirit and collective action through its process.

In terms of organizing effort, it is true that communities with homogenous interests may take less time to organize.
Yet, tailoring organizing programs towards homogenous groups could also run the risk of marginalizing the minority
and the poor. For example, most land readjustment projects examined here included mostly landowners in the
decision‐making process. In the Chinese case, only the villagers who were members of the collective that owned the
land could share the benefits of redevelopment. As a result, renters’ interests were being ignored. Similar problems
occurred in the two projects in Magarpatta and Khed, India where the interests of the landless and lower caste were
not considered when formulating the method of allocating the redevelopment benefits.

Myth No. 4 – The Reality

Given that neighborhood mobilization is a key feature of land readjustment, how should communities be organized?

There are at least three principles. First, implementing agencies should ensure community participation throughout
all phases of the project. The conventional public participation approach is to consult with the affected community
at the inception and the end of the project. Past experiences with this approach have shown that this may be
insufficient to help the community generate a sense of ownership of the project, creating a feeling that the
consultations are merely token efforts. This happened in Colombia, and the Fenicia project in Bogotá (discussed in
Module 2) aimed to correct this problem. The initiator, which was the Los Andes University, had engaged local
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communities and other stakeholders in all key decisions throughout the entire planning process. This was to ensure
that all concerns about the project, and related opposition to the project, were resolved before the implementation
stage. There were numerous examples in the past where developers received the government’s approval of the
design of a project but only found out later that they could not implement the plan due to strong public resistance.

Second, implementing agencies must set explicit standards of public participation that are sensitive to local
contexts. They include, but are not limited to, who should participate, how often the participants should meet and
for what purposes, and what conflict resolution mechanisms should be put in place to deal with disagreements. As
shown from the case studies, community participation will only be meaningful if participants feel that issues
discussed at the meetings are significant to them and their families and that their opinions will make a difference in
the final decision. Community members will find public meetings burdensome if the gatherings are not well‐
organized and are dominated by special interest groups. In some situations, separate focus group sessions with
minority groups, such as women, youths, and other ethnic minorities—who may be hesitant to speak out in public—
could be more effective than a big meeting to collect their opinions. It is also important to be sensitive to the
cultural differences in expressing disagreements. Not all cultures encourage citizens to confront their neighbors
publicly when disagreements emerge. Hence, there should be some informal and anonymous channels for members
to voice their opinions privately. Again there is no one‐size‐fits‐all strategy for systematizing public engagement in
land readjustment projects.

Third, if a community has not been organized in the past, it may be useful to set up small income‐generating
activities to attract members to interact and get to know each other. These activities could be a small handicraft
workshop that brings together female members to manufacture some small sellable products that could help them
earn extra income. More importantly, it provides a great opportunity for them to associate with each other, building
trust in their relations with one another. Similar community activities such as training workshops or sport
competitions could facilitate community organization.

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Myth No. 5

Some analysts have suggested that land readjustment is nonviable if stakeholders do not have pre‐existing trust in
each other. This perception is derived from observations of land readjustment practices in Germany, Japan, and
South Korea where citizens have great confidence in the capacity and integrity of their government. They also trust
their social, legal, and political systems to prevent and punish fraudulent practices. Indeed it is important that
landowners trust their implementing agencies and the system, because they are putting their wealth in the hands of
other people who promise to return another piece of land of high value in the future. In many developing countries
where the rule of law does not govern the nation, it is inconceivable that such property exchanges could take place.

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Myth No. 5 – The Reality

Ironically, land readjustment has been adopted in many developing countries where there is a lack of trust between
the government and citizens and between community members. In examining the case studies, there are always
landowners who care about individual interests and do not always understand their social responsibilities.

Some politicians and public officials care more about re‐elections and job security than their commitments to the
society.

Some private developers care more about profits and believe that affordable housing should solely be the
responsibility of the public sector. In most cases, there may be no overlapping interests that motivate these parties
to work together. Thus, it is important to realistically assess and understand the motivations of the parties who
engage in collective action to make the win‐win outcomes of land readjustment possible.

Myth No. 5 – The Reality

If we can agree that trust‐based relationships require a long‐term investment from the interacting parties, the key
question is how to built trust.

Our case studies showed that it is important to find a reputable and neutral broker to initiate the project. If the
project is proposed by a government that landowners or informal settlers do not trust, it will require a lot of work to
change the perception of the residents before any meaningful negotiations can be carried out. These neutral
brokers could be local academic institutions such as the Catholic University of Chile in Santiago and the Los Andes
University in Bogota or international and local NGOs such as Development Workshop in Angola. More importantly,
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international development agencies such as the World Bank, UN‐Habitat and other U.N. agencies, the Asian
Development Bank, USAID, and many others could also play the roles of a neutral broker, using their financial and
technical support to incentivize the cooperation from different stakeholders.

Because a single stakeholder cannot achieve the redevelopment goals alone, the prime function of the neutral
broker is to identify mutual interests for involved parties, assign responsibilities to different stakeholders, mediate
conflicts, and nurture parties’ commitments to their duties. To do that, the broker must maintain a reputation of
impartiality in order to gain the trust and respect of all stakeholders. By directing and shaping the interactions
among stakeholders, the broker will be able to create substantive dialogues and facilitate collective decisions and
actions among these parties. With repeated cooperation and positive reinforcement, trust‐based relationships will
emerge.

Preconditions for Adopting Land Readjustment

It’s important that these conditions, which we discussed earlier, are examined carefully to tailor the operation of
land readjustment to the local contexts. Although there’s no one‐size‐fits‐all land readjustment, our case studies
have shown some commonalities important to successfully adopting land readjustment.

First, it is generally believed that land readjustment is most appropriate for situations in which affected landowners
or land occupants have motivation to stay in the neighborhood. Because they do not plan to move, due to either
their attachment to the community or proximity to their workplace, the idea of property swapping will enable them
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to return to the same neighborhood. If residents prefer to move to somewhere else and start a new life, purchasing
property through voluntary market exchanges or government acquisition may be a more direct alternative. That
said, there have been many land readjustment projects in which absentee landowners were the majority of the
interested parties. Under these situations, the negotiation of land readjustment will follow a very different
direction, because these landowners are mainly interested in maximizing the capital gains on their real assets.

Second, it is generally true that financial assistance or bridge loans provided by the government or international
development agencies (such as the World Bank and the Asian Development Bank) through central authorities can
help facilitate land readjustment, even though part of the project costs can be recovered from land sale.

Third, government’s credible commitment to land readjustment is critical for its successful adoption. This
prerequisite is undoubtedly true not only for land readjustment but for all policy experiments. Without the
government's long‐term support, no policy experiments could survive inevitable setbacks during their trial period. If
government commitment is absent, international development agencies could act as honest brokers to facilitate
cooperation among stakeholders.

New Initiative

As can be seen from earlier discussions, we are suggesting a different focus for conducting land readjustment. We
are not suggesting a major shift away from perfecting the technical aspects of this land tool. Instead, we want to
propose expanding the professional focuses to an additional governance‐centered approach that emphasizes the
following three factors.
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First, land readjustment is a consensus‐building mechanism. Given the lack of data and technical expertise in most
developing countries, it will be hard to calculate accurately a land exchange formula. That said, land readjustment
could still be implemented if the stakeholders can agree upon a generally acceptable arrangement for land
swapping. Hence negotiation and consensus building are the operations that actually drive the project, not the
scientific estimation of land values before and after land readjustment.

Second, land readjustment should be founded on the idea of creating win‐win outcomes for all involved parties.
Again, this relates closely to the possibility of building a governance structure that will allow all parties to have a
share of the gains; and at the same time, no single party will reap the entire redevelopment benefits. Land
readjustment is not a winner‐takes‐all scenario.

Last, but not least, the above two factors require developing reciprocity and the perception of fairness, both of
which are fundamental for engendering the collective action required for land readjustment. Most people will be
unwilling to cooperate if others do not reciprocate their collaborative efforts. To encourage reciprocity,
collaborative gestures must be perceived as fair. Because contexts are different, the perception of fairness has to be
established through open discussions and mutual understanding. This leads us back to the idea of governance—that
is, to design open and inclusive decision‐making procedures so that no stakeholders would feel that they were left
out from the decision on how to allocate the costs and benefits of land readjustment.

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