Financing transit-oriented development with land values: adapting land value capture in developing countries

Cities in developing countries are experiencing unprecedented growth. But this is often accompanied by the negative impacts of car-dependent urbanization such as congestion, air pollution, greenhouse gas emissions, inefficient use of energy and time, and social inequality of accessibility. The World Bank's transforming cities with transit: transit and land-use integration for sustainable urban development (Suzuki, Cervero, and Iuchi 2013) concluded that compact, mixed-use; pedestrian-friendly development organized around a transit station is one of the most effective strategic initiatives to address the negative effects of motorization. Despite increasing recognition of transit-oriented development as an effective strategic approach for sustainable urban development, most cities, particularly those in developing countries, do not have the practical know-how and expertise to make transit-oriented development happen. Because these cities are almost always under a severe fiscal constraint, they face great challenges in financing capital-intensive mass transit systems to reverse car-dependent urbanization. Development-based land value capture (LVC) in Hong Kong SAR, China; Tokyo; New York; Washington, DC; and London allows these cities not only to generate funds for transit investment and operation and maintenance but also to promote sustainable urban development. If adapted well to local contexts, such schemes have great potential to become an effective finance and planning apparatus for cities in developing countries.