Slums and Squatter Settlements
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Hari Srinivas |
| Opinion Piece Series E-227. September 2025. |
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Abstract Urban slums and squatter settlements are often seen as failures of city planning, but they actually represent rational trade-offs made by low-income residents seeking access to opportunity. When urban growth outpaces formal housing supply, informal settlements emerge as pragmatic solutions balancing speed, cost, and inclusion. Residents accept disadvantages such as insecure tenure, poor housing quality, and limited infrastructure in exchange for proximity to jobs, affordability, and flexible services. Understanding these dynamics reframes policy from eradication toward upgrading and integration. By recognizing the underlying logic of informality, urban managers can design interventions that preserve location advantages, support incremental housing improvement, expand service access, and strengthen environmental resilience. Slum upgrading, tenure security, and community co-production can thus align urban environmental management with the lived realities of the urban poor, turning informal settlements into sustainable components of inclusive cities.
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| Cities grow by balancing speed, cost, and inclusion. Slums and squatter settlements are not urban accidents but outcomes of these trade-offs. Recognizing the logic behind them helps shift policy from eradication to improvement. |
These communities are shaped by a set of trade-offs in which residents accept certain disadvantages, such as insecure tenure or poor housing quality, in exchange for critical advantages like proximity to jobs, affordability, and flexible service arrangements. Understanding the logic behind these choices is key to reframing policy: from a mindset of clearance and eradication toward one of upgrading, integration, and environmental improvement.
| Negative Aspect | Positive Aspect |
|---|---|
| 1. Poor housing quality | Proximity to jobs, markets, and services |
| 2. Minimal investment in construction | Affordability for low-income households |
| 3. Insecure tenure | Access to urban land otherwise unaffordable |
| 4. Lack of formal infrastructure | Informal, low-cost, and flexible service arrangements |
For many low-income urban residents, location is the most valuable asset they can secure. Even if housing is overcrowded, poorly built, or lacking basic facilities, its closeness to employment, transport hubs, markets, and public services can outweigh the disadvantages. The daily savings in time and transport costs often make the difference between subsistence and falling deeper into poverty.
Residents accept lower-quality housing in order to live close to economic opportunities
In Mumbai's Dharavi, cramped housing and shared sanitation coexist with unbeatable access to jobs in leather, pottery, food processing, and recycling. Travel time is money, and location is a wage booster.
In Nairobi's Kibera, many residents work in adjacent middle and high income neighborhoods as domestic workers, guards, and service staff, leveraging short commutes to manage irregular incomes.
In Rio's Rocinha, hillside risk and substandard structures trade off against ready access to the wealthiest job markets in the city. Location is the amenity; structure is the sacrifice.
In cities where formal housing is unaffordable, families often build with the least expensive materials they can find, adding improvements gradually as resources allow. This incremental approach keeps entry costs low, enabling even the poorest households to gain a foothold in the city. Over time, homes may evolve from temporary shacks into more durable structures, reflecting residents�f growing economic stability.
Self-built, incremental construction keeps entry costs low.
In Lima's periferia, families start with lightweight materials, then upgrade walls, roofs, and floors as incomes permit.
Karachi's Orangi Town demonstrates another path: residents financed and built internal sanitation networks at a fraction of formal costs, while houses improved incrementally over time.
In Manila's estero communities, households use recycled materials to keep initial shelter costs near zero, trading durability for affordability.
When formal land markets exclude the poor, informality becomes a pathway to urban land. Residents may occupy unused, marginal, or disputed areas without legal title, accepting the constant risk of eviction in exchange for the chance to live in locations that would otherwise be unattainable. For many, the potential benefits of location outweigh the legal uncertainty.
When formal land markets exclude the poor, informality becomes the gateway.
Makoko in Lagos rests on the water's edge with disputed rights, yet offers access to central markets and fisheries based livelihoods.
In Jakarta's kampungs along rivers and rail corridors, residents accept eviction risk to gain urban access.
In Mexico City and Guadalajara, irregular subdivisions have long supplied de facto affordable plots before formal regularization programs catch up.
Policy implication: Move from a zero or one view of legality to a spectrum of different types of tenure security. Interim instruments such as certificates of occupancy, community land trusts, and block level regularization can reduce eviction risk and unlock private investment without triggering immediate land price spikes.
Without official connections to water, electricity, or sanitation systems, slum residents often rely on informal networks and providers. These arrangements are typically more expensive per unit and less reliable, but they offer flexibility and immediacy where formal systems are slow to extend coverage. Such services are often deeply embedded in the community�fs economy and social fabric.
Where pipes and grids do not reach, informal providers step in.
In Accra and Kumasi, water vendors and sachet markets trade reliability for price and quality variability.
In Port au Prince, tanker trucks fill storage drums, making water available, albeit expensive.
In Dhaka and Phnom Penh, illegal electricity connections and shared meters reduce unit costs but increase safety risks.
Policy implication: partner with the informal to extend the formal. Map providers, organize them into associations, set basic quality standards, and co invest in last mile connections. City utilities can use community managed standposts, pre paid kiosks, and simplified network standards to reach dense settlements at lower cost.
| Prioritize in situ upgrading over displacement. Preserve proximity benefits while fixing environmental deficits such as drainage, sanitation, flood protection, and safe building retrofits. | Plan for incremental standards. Adopt fit for density street widths, simplified sewer designs, and modular stormwater solutions that can be upgraded as incomes and tax bases grow. | Use risk based zoning and mitigation, not blanket prohibitions. Where hazard exposure is high, combine micro relocation within the neighborhood, elevation platforms, slope stabilization, and insurance pools rather than mass evictions. |
| Treat tenure as a ladder. Start with anti eviction protections and collective or block level rights, then graduate to individual titles if and when markets stabilize. | Finance what households already do. Small grants, revolving funds, and output based subsidies for toilets, connections, and safe wiring crowd in private savings and remittances. | Govern with the community. Co produce neighborhood plans, service maps, and maintenance agreements with resident associations, women's savings groups, and local SMEs. |
Environmental management succeeds when it aligns with these choices, lowers the risks they create, and expands the set of better options. The goal is not to erase informality but to make cities safer, healthier, and more productive for the people who already keep them running.
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