Prerequisites and Factors for Effective and Efficient Implementation of Land Pooling/Reconstitution: Learnings from Asian Countries

Abstract

The land pooling/readjustment (LP/R) technique has been extensively used for centuries for fostering planned urban development in various developing and developed countries. In the recent past LP/R models have emerged in several Indian states and cities as an alternate to compulsory land acquisition. These include land pooling in Raipur, Chhattisgarh through the Town Development Scheme - 2015, the land pooling policy for Delhi - 2013, land readjustment and land pooling in Navi Mumbai, Maharashtra - 2014, and land pooling for Amravati, Andhra Pradesh - 2015. There are several factors that could adversely affect the implementation of LP/R projects and different situations would require different kinds of contextually relevant approaches for effective implementation of LP/R projects. Given the emerging LP/R models in several Indian states as an alternative to compulsory land acquisition, this article analyses the opportunities and constraints as recorded in literature around the world, with a focus on Asian countries, to identify the prerequisites and factors for effective and efficient implementation of the LP/R mechanism.

Keywords

Land pooling evaluation challenges Prerequisites factor for success

Background

The land pooling/readjustment (LP/R) mechanism has been extensively used for centuries in countries like Japan and Germany and also in many countries of Asia such as Indonesia, Nepal, Bhutan, Taiwan, Thailand, Turkey, South Korea for various purposes such as controlling urban sprawl, development of new towns, inner-city renewal, reconstruction post-war or after disasters, and development of urban infrastructure (Agrawal, 1999; Larsson, 1997; De Souza et al., 2018; Turk, 2008). There is vast literature regarding the practices of LP/R models and its benefits and significance have been widely documented (Agrawal, 1999; Archer, 1992a; Çete, 2010; Chau et al., 2018; der Krabben & Needham, 2008; Home, 2007; Yu-Hung & Barrie, 2007; Larsson, 1997; Mathur, 2013b, 2013a; Mittal, 2014; Muñoz Gielen, 2016; Sorensen, 2000; De Souza et al., 2018; van der Krabben & Lenferink, 2018). However, there is limited literature on the problematic aspects of LP/R implementation (Sorensen, 2000; Turk & Turk, 2011). Given the emerging LP/R models in several Indian states as an alternative to compulsory land acquisition, this article analyses its opportunities and constraints within the framework of available literature, with a focus on Asian countries, to identify the prerequisites and factors for effective and efficient implementation the of LP/R mechanism.

Land Pooling/Reconstitution Mechanism

Concept

The LP/R mechanism involves reconstitution/readjustment of privately owned land parcels into well planned and serviced plots for the purpose of planned urban development and the process could be both voluntary or compulsory. The basic principle behind LP/R remains the same across countries–appreciation in value of land due to planned development captured for financing the cost of the project.

Characteristics and Process

The process has some basic steps which have been contextualized across countries—it may be initiated by public/private bodies/land owners; scattered irregular plots are pooled together and are subdivided into uniform/regular plot sizes after provision of infrastructure and public facilities; the cost of the project is recovered by sale of reserved land/plots or by levying charges on participating land owners, and in the end the remaining land is redistributed to the original land owners based on some valuation criteria. LP/R has been traditionally used for consolidation of rural land or managing the planned developments of urban fringes (Archer, 1988, 1992a; Condessa et al., 2015; Home, 2007; Mittal & Kashyap, 2015; De Souza et al., 2018).

The generic difference between LR and LP is that in LR, the ownership of original property remains with the owners till the completion of the entire process but with certain restrictions and the agency undertaking the LR process has permission to develop the land by notionally consolidating the land parcels for provision of infrastructure and reconstitution. Once the LR process is complete the ownership is transferred to the new plots. In LP the original land parcels are actually consolidated into one parcel by transfer of ownership of plots from land owners to the pooling agency and the ownership of a reconstituted plot is transferred back to each land owner after completion of the LP process (Archer, 1992a).

Genesis of Land Pooling/Reconstitution

The genesis of the LP/R mechanism is attributed to two key factors: expansion of urban areas by re-zoning of agriculture/rural land, and rebuilding of cities after a war/disaster. The very first legislation on LP/R was enacted in 1875 in Mainz, Germany, although it could not be implemented successfully. Afterwards, the LP/R mechanism spread to many cities/countries for development of new urban areas/redevelopment of existing areas.

Land Pooling/Reconstitution in Asia

Japan, where LP/R projects were implemented based on the Arable Land Readjustment Act, 1899 to reduce urban sprawl, adopted the LP/R mechanism based on Adickes Law through the City Planning Act of 1919. In 1923, the mechanism was used widely to reconstruct the residential areas of Tokyo and Yokohoma after the great Kanto earthquake. Turkey also adopted the mechanism in 1930 for reconstitution of areas affected by disasters. Japan introduced the mechanism in its colonies—Taiwan in 1930, through the Land Act; and in South Korea, in 1934, through the Colonial Urban Planning Act. In 1946, Japan enacted a Special City Planning Law which enabled use of LP/R for the country’s reconstruction after the war and subsequently in 1954 the national Land Readjustment Law was enacted (De Souza et al., 2018). Japan also carried out some technical cooperation projects in the 1990s in Asian countries such as Malaysia, Nepal, Indonesia, Philippines and Thailand (De Souza et al., 2018). The LP/R mechanism was introduced in Indonesia in 1991 through a national regulation (Agrawal, 1999; Supriatna & Van Der Molen, 2014) and in Nepal through the Town Development Act in 1988 (Karki, 2004; De Souza et al., 2018), with the goal to provide basic infrastructure through the participation and contribution of the land owners. In Malaysia the government initiated a legal framework for LP/R in 1999 and in Thailand, the LP/R mechanism was introduced in urban planning projects in 1985 (De Souza et al., 2018). Very little success was achieved in implementing the LP/R mechanism in the Philippines and Colombia (De Souza et al., 2018).

The article presents a comparative analysis of LP/R from the above-mentioned Asian countries which are at various stages of implementation of LP/R projects. For example, in Japan the mechanism has evolved with the implementation experiences of more than a century; in Taiwan, South Korea, and Turkey LP/R has been used extensively; in Indonesia, Thailand and Nepal the LP/R projects have shown limited success owing to policy level and implementation level issues; in Bhutan and Mongolia, the mechanism is in a nascent stage and evolving with the experiences from pilot projects.

Analysis of Land Pooling/Reconstitution Models From Different Asian Countries/Cities

Enabling Policy Framework and Regulations

Many of the countries have started at a modest scale and gradually developed an enabling policy framework and regulation based on the learnings from LP/R projects. The details of the origin of LP/R and subsequent legislations in different countries are given in Table 1. These legislations include:

Establishing the concept and mechanism of LP/R, roles of all stakeholders involved at various stages of LP/R projects from inception till completion.

Prescribing the sector undertaking/initiating LP/R projects—public/private agency or both, property owners and the decision-making process; the majority of the countries have some democratic decision-making process for selection of LP/R projects based on super-majority voting/veto power of land owners. Japan and South Korea are exceptions where LP/R is compulsory for public initiatives and Turkey where LP/R is compulsory.

Establishing the detailed procedure to be followed for planning and implementation of LP/R projects.

Providing the basis and justification for the limits and nature of intervention to private ownership to safeguard the rights of property owners.

Table 1.

Details of LP/R Models in Various Countries.

Country	Enabling Policy Framework and Regulations (Practice Origin), Year of Legislation/Amendments	Purpose	Sector Undertaking/ Initiating LP/R Projects	Participation of Land Owners	Scale and No of LP/R Projects
Japan (De Souza et al., 2018)	Introduced by the Arable Land Readjustment Act, adapted in the former City Planning Law, and promoted by the Land Readjustment Law. (1870), 1899, 1919, 1954 Terminology: Replotting	Control of urban sprawl; Development of new towns; Urban rehabilitation; Development of complex urban infrastructures in intensely urbanized areas, in old industrial areas, or in degraded areas from railway lines, post-disaster reconstruction	Individuals; associations of landowners and leaseholders; land readjustment stock companies established by landowners; prefectural or municipal governments; the Ministry of Land, Infrastructure, Transport and Tourism; and the Urban Renaissance Agency (a central government agency) and the Corporations for Housing and Urban Development (prefectural or municipal government agencies)	Compulsory for LR with public initiative Consent of at least two-thirds of both landowners and lessees (by number and area) for private initiative	Scale: At least 5 hectares As of March 2013: Completed projects – 10,909, covering 329,248 hectares Under implementation projects – 928, covering 36,296 hectares
Indonesia (Agrawal, 1999; Archer, 1992b; De Souza et al., 2018; Supriatna & Van Der Molen, 2014)	Promoted by the circular of the Minister of Home Affairs, then through the Regulation of the Head of National Land Agency, and mentioned in other Acts, like the Act of Housing and Settlement 1985, 1991,2011 Terminology: Land Consolidation	Caters to demand for rapid urbanization and provision of infrastructure and services First Southeast Asian country to adopt land consolidation	Executed by national land agency supported by the concerned institutions: controlling team based at the province level, coordinating team based at the regency/municipal level, task forces consisting of local land agency officials supported by district and village heads	85% of rights holders, which covers at least 85 % of the area of the project	Scale: Non-existent Urban area of 8309 hectares developed in 70 cities through LR projects in the 1980s By 2015, covered 1010 sites and approx 208,814 rights holders, covering total area of approximately 174,496 hectares and 242,507 parcels
Nepal (Ballaney et al., 2022; Karki, 2004; De Souza et al., 2018)	Town Development Act of 1988 (amended in 1991, 1992 and 1997 & 2007) Terminology: Land Pooling	Provides proper land for housing to reduce haphazard land subdivision, and provides quality urban infrastructure and services	Public agencies: Town Planning Implementation Committees & Municipalities	51% of the landowners’ consent	Scale: Mostly small in size (LP project area varying from 5 to 63 hectares Pilot project: Gongabu Land Pooling Project (14.3 ha) in 1988, surged from 1991 to 2002, stagnated due to political instability 13 projects completed in Kathmandu Valley, 8 under implementation and 10 in planning stage. 350 hectares land developed and 16,000 serviced plots created
Bhutan (Ballaney et al., 2022; Farrin et al., 2021; De Souza et al., 2018	Introduced by the Thromde Act and by the Land Act, and fully detailed in Land Pooling Rules of the Kingdom of Bhutan. This was revised and LP&R Regulations introduced in 2018 (2000), 2007, 2009, 2018 Idea of LP/R first introduced during revision of Thimphu Urban Development Plan (1986–2000). Terminology: Land Pooling	Cater to demand of rapid urbanization and provision of infrastructure and services	Public agency: preparation of scheme by local government and approval by central government	75% of the landowners’ consent	Scale: Non-existent Thimpu structural plan implemented through LP. 14 out of 26 Local Area Plans implemented through LP (800 ha) Being replicated in other areas in Southern Bhutan: Damphu, Gelephu & Samchi
Taiwan (Lin, 2005; De Souza et al., 2018)	Introduced by the Land Act, the Equalization of Land Rights Act, the Urban Land Readjustment Regulation, the Farmland Readjustment Act, and then through the Rural Community Land Readjustment Act 1930, 1943,1979, 1980, 2000 Terminology: Land Reconstitution	Caters to demand of rapid urbanization and provision of infrastructure and services. Majority of land readjustment projects implemented in the densely populated urban areas to accommodate the growing population	Initially by local governments Private owners—increased since 1979	Consent of at least 50% landowners (by number and area)	Scale: Non-existent Early 1980s: 2175 hectares supplied through. 82% of all areas developed through land readjustment are located inside 6 major cities (Taipei, New Taipei, Taoyuan, Taichung, Tainan and Kaohsiung). 3% of the urban areas of Taiwan developed through land readjustment – a total of 16,500 hectares of land between 1960 and 2016
Thailand (Agrawal, 1999; De Souza et al., 2018)	Introduced by the Land Readjustment Act, B.E. 2547 (1985), 2004 Terminology: Land Readjustment	Manages urban sprawl, development of vacant land within urbanized areas, development of old central areas, new towns, post-disaster reconstruction	Public and private sectors	75% of the landowners’ consent	Scale: Non-existent As of 2010, land readjustment projects were ongoing in 13 cities
Mongolia (De Souza et al., 2018)	Introduced by the Urban (Cities and Settlements) Redevelopment Law (2012), 2015	Manages urban sprawl, used extensively for improving the condition of Ger areas—the informal settlements in the capital city	Initially implemented by public agencies only Later on, private sector was allowed	Consent of at least 80% of land rights holders	Scale: Non-existent Implementation of the first project started on 9 hectares of the Songino Khairkhan district, 30th Khoroo (2013–2016). Included 168 land rights holders
Turkey (Çete, 2010; De Souza et al., 2018; Turk, 2005; Yilmaz et al., 2015)	First experiences based on the Regulation of Roads and Buildings, and the Law Nº 1663 of Ankara, but formally introduced through Article 18 of the enacted Zoning Law (1864), 1930, 1985		Public agencies: municipalities for urban and governorships for other areas	Compulsory	Scale: Size of a single residential block 3,127 LR projects implemented by 2013. 60.7 % of all projects implemented by large municipalities (population of over 300,000)
South Korea (Agrawal, 1999; Karki, 2004; Turk, 2008)	Introduced by the Colonial Urban Planning Act, then promoted by the Land Readjustment Act-already abolished, and now used under the Urban Development Act 1934, 1966, 2000 Terminology: Land Readjustment	Housing lot development, provision of infrastructure	Private land owners Associations of landowners Municipal or provincial governments Ministry of Construction	Compulsory for LR with public initiative For private: consent of at least 50% landowners (by number and area)	Scale: Non-existent LR used in 84 % of all its cities. 50% of Seoul redeveloped through 17 land readjustment projects 30% of Kwang-Ju city, and 40% of Pusan city developed using LR

Though the legal and regulatory framework for LP/R is quite extensive in Japan it doesn’t address issues pertaining to informal settlements, weaker tenure rights, provisions for land acquisition or compensation for assets. These issues are addressed on a case-to-case basis based on the vast experiences from the past LP/R projects (Agrawal, 1999). In Nepal after an initial surge in LP experiences from 1991 to 2002, there was stagnation from 2002 to 2017 owing to political instability and absence of elected governments at local level. LP in Nepal is implemented based on the Town Development Act and unlike Japan where the LP/R policy and regulations have evolved based on centuries of experience, there is no specific policy or regulation for LP in Nepal even after 30 years of implementation experiences. LP projects are dealt on a case-to-case basis and there is lot of subjectivity in the implementation process and timelines due to lack of a clear legal framework. In Bhutan, on the other hand, the LP/R model was piloted through a demonstration project and the policy has gradually evolved based on the implementation experiences from the LP/R projects (Ballaney et al., 2022).

Roles and Responsibilities of Various Stakeholders

The ambiguity regarding the roles and responsibilities of various involved agencies and lack of coordination and capacities at various levels have led to complexities in implementation of LP/R projects in several countries. Because of multiple agencies involved in the implementation of LP/R in Nepal and owing to capacity issues at various levels, there was high dependency on private consulting firms. Also due to lack of an elected government at local level the LP/R projects were managed by the central government during 2002–2017. The lack of local political leadership, compounded by the mistrust in the project management consultancies resulted in stagnation in LP/R projects in Kathmandu Valley during this period (Ballaney et al., 2022).

Provision for Consultation and Grievance Redressal Mechanism

These LP/R models have provisions for consultation with property owners at various stages of the LP/R project and address their issues through certain grievance redressal mechanisms. In most countries, the super-majority vote from consenting land owners is the deciding factor for undertaking LP/R projects. In Indonesia, where the consent of 85% right holders covering at least 85% of the project area is essential for LP/R projects, sketches of the replotting plan along with details of infrastructure provision is disclosed to the right holders from the very beginning of the project. The country has the highest super-majority requirement among all Asian countries and this has emerged as a challenge in implementation of LP/R projects (Agrawal, 1999; De Souza et al., 2018). In Japan, where many projects have been affected due to public opposition there is an elaborate mechanism for communication, consultation and grievance redressal (Sorensen, 2000). Although there is no rule for a super-majority for government-led LP/R projects in Japan, based on the past experiences of public opposition, the government prefers not to move ahead unless there is substantial (thumb rule of 80%) public support (De Souza et al., 2018).

The lack of awareness amongst property owners has emerged as a challenge in most of the countries, except Japan where LP/R has garnered wider public acceptability. Property owners here are hesitant to contribute land and participate in LP/R as they perceive it as a lengthy and cumbersome process. Also, hold-out issues arise due to property owners who already have access to infrastructure/facilities and free-rider issues due to those who refuse to join because they want to maximize their self-interests. Adequate legal basis to minimize litigations, extensive consultation and grievance redressal mechanisms to foster consensus building through a democratic decision-making process are key factors for success of LP/R projects in Japan. The implementation of these projects as administrative measures and not on contract basis ensures that the opposing land owner(s) cannot stop the implementation of a project or take it to litigation easily. In case there are litigations even after the rigorous and extensive consultation process, the project implementation can continue until the judgment is given based on strict rules and procedures. This lengthy process weakens the opposition of landowners as they find it cumbersome (De Souza et al., 2018).

Planning of Project/Scheme

The factors regarding location, size and cost of the LP/R project and the efforts/duration required for the implementation are based on the background data available for the project site such as cadastral record, database for valuation, number of land owners and plot sizes, characteristics of the community. All these have greatly influenced the success of LP/R projects in these countries. Strategically selecting the LP/R site based on the development pattern in a city and appropriately sizing the projects are crucial factors for their effective implementation. It also emerges that LP/R projects need to be in sync with the overall city-level planning in order to avoid sporadic and half-hazard growth and to ensure appreciation in land value. In Kathmandu Valley, Nepal, where there is no legally binding master plan, the LP projects are implemented in an ad hoc manner without any city-level vision, based on the land use plan from 1976 and the building bye-laws. (Ballaney et al., 2022). Though LP/R has been successful in managing urban sprawl and unlocking developed land through provision of infrastructure it has shown limited success in achieving city level planning benefits. Thimpu, Bhutan, has successfully used LP for implementation of the city master plan through Local Area Plans.

Inclusivity

The LP/R models have shown limited success in addressing the social issues, especially those related to low-income housing, unless the projects are specifically tailored to address the informal/inner city areas, such as the Ger area development in Mongolia. Also, it has been burdensome for small land owners as it has led to appropriation of their land, allotment of land on co-ownership or allotment of additional land to ensure minimum lot size on payment of equity. Small land owners in Japan are compensated either by providing co-ownership for serviced plots or paying of equity or deducting more land from larger plots by payment of equity to the landowners to provide appropriate size plots to small land owners (De Souza et al., 2018).

Existence of an Active Market with High Demand for Developed/Serviced Land

The existence of an active market with high demand for developed/serviced land has been the key deciding factor for success of LP/R projects in these countries. In Taiwan, LP/R initiated by private land owners has increased manifold since 1979 due to the shortage of urban land and rising price of housing (Lin, 2005; De Souza et al., 2018). The significant increase in land values after LP/R projects has incentivized property owners to participate in such LP/R projects, the majority of which have been implemented in the densely populated urban areas. High prices have resulted in high vacancy rate and speculation has emerged as a key challenge in LP/R projects in countries like Nepal, Bhutan and Turkey (Karki, 2004; De Souza et al., 2018; Turk, 2005). In certain LP projects in Bhutan a significant number of plots (around 30%) have been left vacant till date, owing to speculation, although the infrastructure development has been completed since 2012. Speculation has defeated the purpose of LP/R as it has led to irregular development in other areas such as peri-urban areas with lower land and tax values. (Ballaney et al., 2022).

Funding Mechanism for LP/R

Details of funding mechanisms for LP/R in different countries has been given in Table 2. The majority of the models have some prescribed rules for replotting and land exchange ratio by which land is reserved for facilities and services, housing for the poor, and creation of reserve land for public agencies. The land exchange ratio is determined based on either area or a value-based method. The value of plots is dependent on multiple factors such as location, width of access road, access to infrastructure and facilities. It is observed that the area-based method doesn’t take into consideration the appreciation in plot value due to all these aspects. Thus, the area-based method has faced the opposition of property owners in countries such as Turkey (De Souza et al., 2018; Turk, 2005) as it is less equitable. Any imbalance during replotting/ reconstitution is balanced by equity payment/collection in the majority of the models. A few countries have the provision for context-based land exchange ratio: Nepal, where contribution share depends on the total cost to be shared by all the land owners (Karki, 2004), and Mongolia, where land exchange ratio is determined at the inception stage of a project through a detailed survey (De Souza et al., 2018). However, the context-specific land exchange ratio involves a lot of negotiation and persuasion with the community which has resulted in significant delays in the LP projects in Kathmandu valley, Nepal (Ballaney et al., 2022).

Table 2.

LP/R Funding Mechanisms of Various Countries.

Country	Inclusion of Infrastructure Cost	Funding Mechanism
Country	Inclusion of Infrastructure Cost	Support/ Assistance From Public	Cost Recovery Mechanism	Amount of Land Contribution	Valuation Method	Adjustment After LP/R
Japan (De Souza et al., 2018)	Included	Govt subsidies for primary infrastructure cost	Land contribution not specified clearly in the law—land contribution for public space/ facilities and reserved land. In privately led projects the equivalent value of the land contribution not to exceed the percentage stipulated on the increase of the total value of private land after the project	Land deduction rate is not specified (usually 20% public space/ facilities and 10% for reserved land)	Value basis: 3 calculation methods: experience basis, zonal value, street value Street value is most widely used Land contribution ratio is area based	Equity payments Option for co-ownership or equity payment to avoid excessive small plots
Indonesia (Agrawal, 1999; Archer, 1992b; De Souza et al., 2018; Supriatna & Van Der Molen, 2014)	Not included. Infrastructure construction is not one of the steps in land consolidations, it is considered to be part of post-project implementation	All procedural costs (outside of land contribution) are borne by local authority Mainly funded from national, regional, or local budgets, or through the self-finance mechanisms of community initiatives	Land contribution, monetary contribution or both	20% of original plot size in the pilot project (Renon District Project in Denpasar, Bali Province, in 1981, area 77.3 ha and 261 plots)	Area basis	No provision
Nepal (Ballaney et al., 2022; Karki, 2004; De Souza et al., 2018)	Included	Loan provided by Town Development Committee (or the municipality) from a revolving fund Paid back through the sale of the reserved plots	Land contribution for public space/ facilities and reserved land	No specific rule regarding the contribution ratio Contribution ratio uniform for open spaces and reserved plots. For roads, depends on the existing and proposed road/access	Value basis by street value Land value determined based on access road (width, type, etc.)	Equity payments Option for small land- owners (less than the permissible area of 80 sq.m.) to buy land at predetermined rate or take equity payment
Bhutan (Ballaney et al., 2022; Farrin et al., 2021; De Souza et al., 2018)	Included	Cost for infrastructure development to be financed by government—main reason for delay of the implementation of several projects WB and ADB support in initial projects	Land contribution for public facilities and reserved land	30% maximum	Area basis Land pooling rules have a provision for the calculation of different contribution ratios. Could not be implemented due to lack of technical capabilities	Equity payments for adjustment
Taiwan (Lin, 2005; De Souza et al., 2018)	Included	Tax deduction and low interest loans were offered to encourage privately led projects	Land contribution for public facilities and reserved land	45% maximum	Value basis; Area basis Pre-adjustment value determined based on location, access, siting, sunlight, development feasibility	Equity payments
Thailand (Agrawal, 1999; De Souza et al., 2018)	Included	Land Readjustment Fund was established in 1993 to jumpstart land readjustment projects Limited subsidies from government	Land contribution for public space. Cost-equivalent land for cost of the project	Approx 40%, limit not specified	Value basis	Equity payment
Mongolia (De Souza et al., 2018)	Included	Only pilot project was fully financed from the state budget to make a model project	Land contribution for public space. Cost-equivalent land for cost of the project	Not specified. Determined through the survey at the inception of project	Value basis. Market assessment of the land, real estate, and advanced estimation of the land through consideration of the project evaluation ratio made by the Ger area
Turkey (Çete, 2010; De Souza et al., 2018; Turk, 2005; Yilmaz et al., 2015)	Not included	All procedural costs	Land contribution for public space. Cost-equivalent land for cost of the project	40% maximum. In case contribution % within the project area is more than 40%, the difference is \|expropriated by the municipality	Area basis Amount of area for area basis	Area based —there is no parcel appraisal, before or after the project
South Korea (Agrawal, 1999; Karki, 2004; Turk, 2008)	Included	Subsidies from state and local bodies	Land contribution for public space. Cost-equivalent land for cost of the project. Portion of land pooling proceeds to be set aside for financing cost of 30% of low-income housing	Not specified (usually 24 to 28% deduction for public facilities/space and 8 to 10% for reserved land)	Value basis; Area basis Valuation value by street value Amount of area for area basis	Equity payment

Cost Recovery Mechanisms

The key cost recovery mechanisms involve sale of reserved land and levy of development charges on property owners. In countries like Japan, Bhutan, Nepal and Taiwan the cost of a project is subsidized to a certain extent by assistance from the government. In Indonesia, LP/R projects have been adversely impacted due to non-availability of infrastructure due to lack of financial assistance from the government, as development of infrastructure is part of the post project implementation. In Taiwan, where the Act of Promotion of Private-Owners Initiated Land Readjustment was enacted in 1979 to address the issues of lack of financial and technical capacities in local municipalities, public assistance is provided for LP/R projects in the form of incentives such as tax deduction and low interest loans (De Souza et al., 2018). Also, the decision regarding the standards of infrastructure/facilities to be provided in the LP/R projects has influenced the viability of the projects. The higher the standard, the higher the project cost and risk of cost recovery and this implies a financial burden on the implementing agency/land owners. In Nepal, the LP/R projects are completely self-financed with limited support from the government in the form of loans; the cost of development of infrastructure is recovered from the sale of reserved land. Thus, projects are delayed significantly due to long negotiations with property owners regarding land contribution ratio. In case the ratio isn’t significant enough to generate adequate reserved land the level of infrastructure has been reduced in LP/R projects in countries like Nepal and South Korea. The limited contribution ratio of 30% in Bhutan has resulted in difficulty to generate sufficient reserved land owing to the terrain constraints (Ballaney et al., 2022).

Learnings From Asian Models

The analysis of these models shows that LP/R can be a viable and more equitable alternative to land acquisition. LP/R not only minimizes the transaction cost of assembling land; it also can be self-financing to a certain extent depending on the context of the project through mechanisms such as imposing land contribution by land owners, development charges/or selling of reserved land. It is a win-win situation for both government and the land owners who become partner in the development process by contributing land and gaining from appreciation in the property value due to provision of infrastructure. The appreciation in property value at times far exceeds the contribution by land owners due to high demand for serviced land and conversion of irregular parcels into regular plot sizes, which increases the marketability of the properties. This equitable nature of the LP/R mechanism has also helped in minimizing hold-out issues and litigations. LP/R has also garnered wider social and political acceptability as the process entails extensive public consultation and participation.

The LP/R process consists of several concepts and implementation stages involving multiple stakeholders and any legal or technical lacuna may lead to challenges in effective implementation of a project. Therefore, the legal and regulatory framework and governance structure are crucial for determining not only the implementation process but also the equity rules for distribution of costs and benefits among all stakeholders. For Indian states and cities planning to pioneer LP/R models it is necessary to first test out the model through a pilot project which would serve as a demonstration project for the community and would help build their confidence and trust. They can then build on this experience for city-wide development by strategically implementing LP/R projects in an incremental/phased manner.

Though LP/R has been successful in managing urban sprawl and unlocking developed land for urban development through provision of infrastructure it has shown limited success in achieving city level planning benefits in countries where the projects have not been in sync with city level plans and has failed to address the social issues, especially those related to low-income housing. In such scenarios the benefits of LP/R have been limited to the participating land owners. Planning of LP/R projects in sync with the city level development plan and strategic siting of projects to address the demand for serviced land are crucial factors for their success. This issue can be addressed in Indian cities by either subsidizing low-income housing through gains from LP/R projects or converging funds from other social schemes for creating housing stock for low-income housing in some of the reserved land parcels.

For a developing country like India, LP/R could be a viable alternative for cities facing challenges of unplanned developments and urban sprawl; however the limited financial and technical capacities could hinder the efficacy and efficiency of the LP/R projects. Bearing the up-front cost of providing the infrastructure could be a major challenge for the government in Indian states and cities where the local governments are often fiscally constrained and credit markets are not well developed. In scenarios where the land owners are also fiscally constrained, such as in the rural fringe, informal settlements or areas with small land holdings, land contribution ratio or levy of development charges may lead to burdening the land owners and their subsequent opposition to LP/R projects. There is a trade-off between self-financing of LP/R projects and the level of participation of property owners. In countries like India the support from a public agency or roping in of the private sector through enabling policies would become essential to avoid burdening of land owners, especially the small ones.

Also, as seen in the case of many countries like Nepal, Turkey, Indonesia and Bhutan, the requirement of a high level of real-estate appraisal for a value-based LP/R model would be a challenge for Indian states and cities where land records and the valuation system is still not very developed and there is a high dependency on manual cadastral records. The issues related to unclear tenure status owing to litigations or co-ownerships would also be a major challenge for Indian cities. The size-based valuation with appropriate legal and regulatory provision for context-specific solutions could be a more viable option for the Indian scenario.

The following prerequisites and factors for effective and efficient implementation of LP/R emerge from this comparative analysis of Asian models of LP/R. For the purpose of this article ‘effectiveness’ means achieving desired objectives for planned development and ‘Efficiency’ means equitable distribution of costs/risks and value gains among all stakeholders involved in the LP/R process.

Prerequisites for Land Pooling/Reconstitution

Enabling Policy Framework and Regulations

Clearly laid-down procedure and principles including a timeline to be followed at various stages of planning and implementation of the LP/R project

Well defined roles and powers of all concerned agencies and rules related to the power of all concerned public agencies

Needs to be simple and transparent to enable the property owners to understand the implementation method and the outcomes of LP/R; this would enhance their confidence in the LP/R project

Adequate provisions to address the implementation issues such as ownership or land title issues (co-ownership/litigation), hold-out issues, free riders and speculation

Provisions for ensuring equitable sharing of risks and benefits amongst stakeholders, especially protecting the interest of small land owners

Provisions for consultations to foster consensus building through a democratic decision-making process and adequate grievance redressal mechanism and legal basis to address public opposition/dissent and minimize litigations

Well-defined Roles and Responsibilities

Adequate technical and financial capacity of nodal agency for planning and implementing LP/R projects. Provisions for strengthening of their capacity to address implementation level challenges

Mechanism for smooth coordination among all concerned agencies such as agencies undertaking survey/valuation/provision of infrastructure/planning of LP/R scheme, financial planning. Provisions for streamlining and synchronizing the efforts for timely completion of LP/R projects

Strengthening nodal implementing agency to not only launch the LP/R model but to sustain an active organizing programme spanning a longer duration

Well-conceived Project/Scheme

Well informed decision regarding siting of the LP/R projects—in sync with the overall city level planning and ensuring presence of an active market with high value and demand for developed land

Appropriate sizing of LP/R projects based on the background data available for the project site, such as cadastral record, database for valuation, number of land owners and plot sizes, characteristics of the community

Proper financial planning to ensure effective implementation of all project related activities such as land development, provision of infrastructure and development of facilities

Factors for Effective and Efficient Implementation of Land Pooling/Reconstitution Projects

Cost Recovery

All costs involved to be included in budget of the project to ensure effective implementation: cost of land acquisition if any, cost for compensations/equity payment, costs for relocation/transit accommodation in case of brownfield LP/R projects and all procedural costs

Adequate provisions for recovery of cost to minimize risk, such as reservation of land and levy of development charges

Development of infrastructure, especially roads, to be part of project to ensure appreciation in land value as a result of LP/R, but level of services and facilities to be effectively decided based on the cost recovery potential from LP/R projects—viability gap funding from government, creation of revolving fund to channelize the funding generated from LP/R project into subsequent projects/higher land contribution ratio/levy of development charges wherever feasible.

Support from government, especially in projects where the benefits are realized at a much wider level than the project area, convergence funds in LP/R schemes especially funds from social improvement schemes, provisions for integrating LP/R with other state/centre-led urban development programmes and promoting private sector participation through appropriate enabling policies

Equitable distribution of cost to minimize the burden on stakeholders such as public agency/land owners. High burden on land owners would dissuade them from joining the project and high risk on public agency may result in delay/abandonment of projects

Ensure equity and equality at all stages—due consideration to value of original plots at the time of joining, transparent and consultative mechanism for valuation and fixation of plot sharing ratio and additional charges if any, transparency regarding replotting and final allotment of serviced plots

Provisions for monetary compensation for addressing equity issues

Participation of Land Owners

Effective public participation through transparent procedures and elaborate communication mechanism to enable informed decision-making by landowners

Ensuring availability of persuasive organizers with the nodal implementing agency for effectively engaging with land owners and fostering their support for LP/R projects

Effective grievance redressal mechanism to foster trust relation and cooperation between all involved stakeholders and minimizing dissent among land owners

Leveraging political will and backing for trust building in implementing agency and LP/R mechanism.

The LP/R mechanism has been used in widely different context in the Asian countries for addressing various urban development challenges. These prerequisites and factors for effective and efficient implementation derived from the implementation experiences of various Asian countries would serve as guiding principles for any Indian state/ city planning to adapt LP/R mechanism.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

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