Peri-urban: Contested land

Expanding cities

“Land as an economic variable is exceedingly hard to get at. The fact that land is open and above board, physical and concrete, and legally divided into neat, carefully described parcels or lots does not help one determine the supply of land.” – Theodore Schultz

Peri-urban areas signal the outward movement of the edges of cities. Land resources in the peri-urban areas undergo rapid changes due to multiple land uses, rapid population densification, frequent land transactions and incipient rises in land values. Land is a multifunctional and multidimensional physical resource at the heart of complex processes that define territories and regions. There are rapid changes in the land resources in the peri-urban areas, leading to further changes in land use.

Over the years, the influence of the city has spread to the peri-urban zones. In course of time, IT parks and industries have been set up in the peripheral areas of Bengaluru. Therefore, peri-urban areas have emerged as engines of economic growth. There have been dynamic changes in the peripheral locations with the establishment of these IT parks and subsequent developments and creation of external economies.

As cities spread and expand further into the countryside, they always absorb farmlands and villages. As a result, land transactions increase in the peri-urban areas because the supply of land in the central business district (CBD) is limited. The land market becomes centred around the peripheral areas of the city, with residential, commercial and industrial land transactions.

In general, peri-urban areas experience unprecedented levels of land transactions to prospective buyers and developers for various land use purposes. There is a rapid growth of real estate activities in the peri-urban land market though there is a general neglect of the peri-urban areas by the responsible authorities and lack of appropriate administrative policies. The unprecedented growth of the fringe brings about dynamic changes and frequent land transactions. The peripheral land markets surrounding the CBD invites buyers and sellers for residential, industrial and commercial transactions.

The World Bank’s “World Development Report: Reshaping Economic Geography” (2008) emphasises that the policy problem of achieving greater economic density remains fundamental for areas at all stages of urbanisation. It identifies the main market failures related to urbanisation policies associated with land markets and to improve functioning of (rural and urban) land markets and the provision of (rural and urban) social services.

In peri-urban areas (PUAs), the interface between urban and rural areas, common and interlinked characteristics exist, and the transition leads to land markets expanding and land becoming increasingly commoditised. As a result, land transactions in peri-urban areas become more frequent, and pressure increases to sub-divide land into smaller parcels in order to increase supply and financial returns.

Authorities in peri-urban areas tend to be thinly spread and unable to carry out land governance and administration functions effectively in line with the transitional nature of those areas. This undermines the capacity of the land administration and land management practices in the peri-urban areas.

Enforcement of contracts and economic transactions are at the core of well-functioning market economies. As emphasised by Douglass North, winner of the 1993 Nobel Prize in Economics, “the inability of societies to develop effective, low-cost enforcement of contracts
is the most important source of both historical stagnation and contemporary underdevelopment in the Third World”.

Cross-country empirical research shows where the social and legal institutions that support land and real estate transactions are weak, as in Africa, Latin America and South Asia, the most urgent urban land policy issue may be to establish institutions (rule of law) that facilitate economic transactions and lower transaction costs.

Land rights, transactions

The critical question is, what happens to the land rights and land tenure relations as the local peri-urban communities themselves become part of the city, as their farm lands are turned into urban built-up properties and as the area becomes home to a large number of urbanites both formally and informally?

Studies on peri-urban land transactions at the global level and in India estimate the extent of land transactions, demand and supply relationship, effects of land markets. The unprecedented growth of urban population causes an exceptionally rapid increase in the demand for urban land. The rising demand for urban land therefore tends to be met primarily by converting peri-urban agricultural land at the periphery of the existing built-up area.

Peri-urban villages of major metropolitan cities of India have been subject to frequent land transactions in the past two decades, driving up land prices. There is mounting competition for peri-urban land located adjacent to towns and cities from people of diverse backgrounds. As a result of these pressures and rapid socio-economic change, space in the peri-urban area is becoming scarce and conflicts over land rights are becoming very noticeable.

The peri-urban edge is the most active frontier of urban development. In the last decade, the urbanisation of these rural fringes has proceeded with high momentum due to the growth of IT corridors in Bengaluru. This uncertain dynamics of the peri-urban area is explained in the context of contested land in the major cities of India.

(The writer is Assistant Professor, Acharya Institute, Bengaluru, and Doctoral Fellow, ISEC)