Document(s) 9 of 14

INTRODUCTION

In the event of a political settlement to the Palestinian–Israeli conflict, some refugees and displaced Palestinians may choose to move between the different countries as well as between particular locales; and the development or rehabilitation of infrastructure and housing to accommodate them could occur in a variety of forms. Some refugee camps may eventually be abandoned; but it is likely that some households in camps – particularly camps with more permanent structures that are well-placed for employment and other purposes – will, for a variety of reasons, choose to stay where they are. These camps may be converted to proper municipal urban areas. New extensions to villages, towns and cities, where there is already extensive infrastructure and capacity in place may emerge; existing towns and villages may intensify within their current boundaries; and the possibility of building new towns has been raised.

This chapter summarizes findings from several studies on refugees, carried out in two phases by the World Bank. The findings summarized here are those related to infrastructure and housing.¹ The Bank's purpose, in carrying out this analysis, was not to make recommendations, but to gain a better understanding of the technical issues that would need to be addressed as agreed solutions to the refugees issue are implemented; and to examine the likely costs of different proposals to inform the discussion on what is feasible and over what time frame.

The analysis recognizes that population movements and the upgrading or development of housing and infrastructure related to a political settlement are unlikely to take place as one large centrally planned exercise. It also recognizes that the developmental challenges of absorption are most easily dealt with if population movements are voluntary and not bureaucratized. In the absence of 'push' factors, relocation decisions will be based, in large part, on economic opportunities in, for example, the West Bank and Gaza as compared to present host countries. Many of the measures necessary to accommodate refugee or displaced households are also needed to improve living conditions for existing populations and better accommodate future growth. In the West Bank and Gaza, for example, there are deficiencies in infrastructure and constraints in the housing market that need to be addressed. In seeking to answer questions about how the accommodation can take place and how much it will cost, the Bank has drawn on its experience in upgrading camps and informal housing areas and developing new residential areas – experience which is very much in line with the measures that might be needed to accommodate some refugee/displaced households.

This paper summarizes findings from three internal reports in particular:

(A) The Phase I report Infrastructure and Housing Costs: Technical Note, June 2000;

(B) The Phase II report The Absorption of Refugees in the West Bank and Gaza: Potential for Housing Accommodation on Public Land in Selected Study Areas, September 2002; and

(C) The Phase II report Housing Finance for Returnees: Issues and Policy Options, March 2002.

For ease of reference, these are referred to as Reports (A), (B), and (C) in the rest of this paper. In the first phase of the studies, analysis was carried out on the need for, and costs of, upgrading typical public infrastructure (roads, water, sanitation, and electricity networks, etc.); social infrastructure (schools, health centres, and community centres), and private infrastructure (housing and on-plot infrastructure) in refugee camps and other areas with refugee concentrations (including de-densification where existing camps were heavily overcrowded), and for constructing new housing accommodation, both in extensions to built-up areas as well as new urban areas. Report (A) describes the framework for gauging the infrastructure requirements for a range of 'options', and estimating their costs, expressed in average per capita terms. The cost estimates were for on-site infrastructure only, and were not area-specific, allowing elements to be selected from the various options and to be applied in different locations/countries.

The second phase, inter alia, looked at the potential for accommodating significant movement of refugees between countries, building on the Phase I work by looking at some potential typical sites in West Bank/Gaza, and providing more detailed cost estimates. The 'absorption study' involved analyses by consultants, co-ordinated by the Ministry of Planning and International Cooperation (MOPIC) on the potential for, and costs of, rapid residential development on public land in several specific, but illustrative, study locations in the West Bank and Gaza. Three consultants' studies provided the analysis:

Nijem, Khalil, Absorption Capacity in the West Bank and Gaza Governorates: Public and Waqf² Land, September 2001;

Asa'd, Abdel Karim, and Anan Jayyousi, Water and Wastewater Sector Investment for Refugees, June 2001; and

Zeidan, Khaled, Estimating the Roadway Costs Associated with Absorbing Palestinian Returnees to the West Bank and Gaza, September 2001.

Report (B) is a synthesis of the findings of these three studies on availability of public land, and the estimated needs and costs of critical off-site infrastructure (water, wastewater and transportation, that is the more binding constraints) for accommodating returnees on public land in the West Bank and Gaza. It complements the Phase I work, which was limited to estimating on-site costs and was not site specific. Again, the logic applied could be extended to other geographical areas.

In recognition of the extremely high costs of constructing or rehabilitating housing, and with no presumption that all costs could or should be borne by donors or any other particular source, the housing finance study carried out in Phase II looked at financing options, taking existing housing market conditions and ongoing or planned policy reforms into account. Report (C) summarizes the study, which was based on consultant and World Bank staff experience in the West Bank and Gaza and existing literature. The focus was on housing finance and housing market conditions in the West Bank and Gaza, although many of the findings are largely applicable in other host countries.

ON-SITE INFRASTRUCTURE AND HOUSING COSTS

Background

Palestinian refugees and displaced people are spread across Jordan, the West Bank and Gaza, Lebanon, Syria, and elsewhere. Nearly one third of the registered refugees – about 1.3 million people – live in 59 recognized UNRWA refugee camps in Jordan, Lebanon, Syria, the West Bank and Gaza; and a significant number live in informal settlements near camps.³ Camps range from those where there is only an old rudimentary water reticulation system, no piped sewerage, unpaved roads and footpaths, and no surface drainage system, to those with water, sewerage and drainage systems, and paved and drained roads and footpaths.

Table 8.1: Distribution of registered refugee population

Source: UNRWA figures for June 2002.

Development options

The Phase I work looked at the requirements for (a) upgrading 'typical' refugee camps, including converting them to proper municipal standards, on the basis that some refugees will probably choose to stay where they are, particularly if the areas are upgraded, and (b) new extensions to existing villages and urban areas, where there is already extensive infrastructure and capacity in place, as well as (c) building new urban areas. It presented a framework for analysing various forms of upgrading or new development and estimating their costs. The forms analysed are referred to as 'options', although it should be understood that any or all of them could occur. Costs have been estimated for a number of upgrading options, ranging from minimal upgrading to full upgrading and/or redevelopment, as well as the development of completely new communities. The options analysed in Phase I are summarized below and in Table 7.2.⁴

Option 1: camp upgrading

Many camps are characterized by over-crowding, inadequate services and inadequate access to plots. A minimum level of upgrading within the existing camp form and layout has been carried out in some camps, and this level is included as Type 1 – the minimum type of upgrading in this study – involving the installation or rehabilitation of water, sewerage and drainage systems; properly paved roads and footpaths; street lighting; and telephone networks – but leaving road and footpath locations and widths and plot layouts unchanged. Camps upgraded to this minimum level generally do not meet municipal standards for road widths and access, plot setbacks and so on, and many plots remain overcrowded. In the six additional Types – 2 to 7 (see Table 7.2) – the objective was to retain existing infrastructure and superstructure to the extent possible, in order to minimize both public and private costs, and to maintain the social cohesion of the site; but also to improve access, allow additional services and facilities, and decrease density in some extremely crowded camps. Types 2 and 3 maintain the general plot layout and involve some plot amalgamation and dedensification. Where plot layouts cannot be maintained, Types 4 to 7 define a 're-development' approach, with parts or all of the camp structures being demolished and re-created to municipality standards. Types 2 to 6 all involve some demolition, and the costs of permanent resettlement of the affected households in an 'urban expansion' area (Option 3) are included in the upgrading cost estimates.

Option 2: upgrading in informal areas outside camps

This type of upgrading of informal areas is based on the recent experience of the Community Infrastructure Program (CIP) in Jordan. It involves little change in population density.

Option 3: urban expansion areas for resettlement/returnees

This option looks at resettling households around existing towns and cities where there is already infrastructure and capacity. Two modules were designed, one focusing on individual plots, and the other on apartments, although in practice, a combination of the two may evolve. These will allow a variety of urban structures, plot sizes and configurations, and varying building forms for housing and small-scale commercial use.

Option 4: new communities

Under this option, resettlement is assumed to take place away from existing habitations, that is, in new towns, requiring more extensive infrastructure, including municipal capacity, municipal buildings, and connector roads to other towns, etc. Costs for new free-standing communities were based on accommodating people in a number of modules, similar to those in Option 3–50,000 and 250,000 people for a new town and a new city, respectively, and on typical land use and infrastructure costs. The analysis is limited to outlining the infrastructure, housing and land requirements and costs of a hypothetical new town; it does not review the issues and significant risks associated with the economic and social viability of a new community.

Table 8.2: Options for upgrading or new development of housing and infrastructure for refugees and displaced people

Relocation because of demolition

All the types of upgrading and redevelopment under Option 1 (except Type 1) involve some demolition. In some cases demolition is only required in order to upgrade infrastructure to higher standards (i.e., more or wider roads) or to combine plots to more acceptable standards and to decrease density; in others demolition is required for redevelopment. Where these types involve demolition, they also involve relocating families. Some of this relocation is temporary, in order to accommodate the work on site; however, where the upgrading or redevelopment results in a lower population density on site, then the relocation is permanent. The issues of land tenure and compensation for demolition and their effect on beneficiaries are major considerations.⁵ In this analysis, for the purposes of estimating the full costs of the options, it is assumed that families to be permanently relocated would be resettled elsewhere, as per the 'urban expansion' modules described below.⁶ The costs of permanent relocation (for housing, land, public and social infrastructure at the resettlement site) are included in the total costs of the upgrading.

Cost estimates

Public and social infrastructure

Any of the options are likely to involve the basic elements of public infrastructure, social infrastructure (schools, health centres and community facilities), housing, and land. The costs of public and social infrastructure for these options are based on conditions in existing camps and sites, and on recent construction and upgrading contracts, but are not area specific. They are expressed in US dollars per 1,000 refugees and are indicative of costs on an average basis. Before finalizing any future plan, detailed site-specific appraisals would be required.

Public infrastructure

The estimated infrastructure costs in this phase of the analysis are for on-site construction of the infrastructure (roads and footpaths, water and sewerage, drainage, power, and telephone lines) needed to upgrade existing camps and informal settlements. Estimates are based largely on observed construction costs in Jordan. Construction costs vary significantly, depending, inter alia, on topography and soil type, and contracting market conditions. For upgrading works, they also vary according to road widths and housing density. Cost estimates in Table 7.3 are capital costs of utility infrastructure only; they do not include off-site works.⁷

Social infrastructure (schools, community centres and health centres)

The working assumption is that the existing built social infrastructure in camps will remain unchanged because the resulting lower population densities will reduce current overcrowding in the various facilities. The costs of social infrastructure for the appropriate number of 'relocatees' (that is those relocated from camps) are estimated according to the assumptions for the new urban expansion areas, which in turn are based on public planning criteria.

Several simplifying assumptions have been made regarding factors such as household size, residential densities and infrastructure requirements. As and when more specific information becomes available, more detailed costs can be estimated. Several issues have not been addressed, for example costs of public transport and other amenities, nor have any operation and maintenance costs been included. It is important to note that the estimated costs outlined in Tables 7.3 and 7.4 do not include any contingency allowance, and that they pertain to a period prior to the recent period of political and economic deterioration.

The seven types of upgrading/redevelopment were defined on the basis of observed layouts and existing plot sizes, housing structures, infrastructure networks, and land availability, and based on conditions in camps in the West Bank, Gaza, and Jordan. However, only a few camp layouts and structures have been reviewed in detail; more in-depth study would be needed to determine whether there are other 'typologies' that would produce significantly different results. Although the types are based on observations of specific camps, they are 'generic', and their relevance depends on current or 'starting levels', not particular locations. The cost estimates in Table 7.3 are based largely on costs observed in Jordan. Construction costs (for infrastructure and building) are higher in the West Bank and Gaza; indices are estimated at 1.5 for the West Bank, and 1.35 for Gaza. These estimates can be used as building blocks to estimate the costs of various scenarios. Similarly, indices could be developed for other geographic areas to estimate costs elsewhere.

Housing and land

Housing

In recognition of the inadequacy of much of the housing currently occupied by refugees and displaced persons, the costs of building new units or upgrading existing housing were estimated. However, the inclusion of housing and land in the cost analysis should not be taken as an endorsement of full-scale public construction of housing, which would not be feasible for several reasons – including equity considerations, as well as the extremely high costs.⁸ Nor does this paper assume that donors or others would be willing or able to pay for housing construction.

For the purposes of this analysis, cost estimates for new housing (i.e., for Options 3 and 4, and for redeveloped areas within camps) were based on 120 square metres of built accommodation per household. A modest house of this size, typical of housing in the region, was estimated to cost (without finishings) in the order of $41,400 in the West Bank, $37,260 in Gaza, and $27,600 in Jordan.⁹ In the camps, much of the existing housing is sub-standard, and needs to be expanded, modified, or re-built in some way to comply with safety and other regulations. The cost is roughly estimated at about 65 per cent of that for new housing cost, resulting in a range of $18,000 to $27,000 per house, depending on the location.

Land

Much of the land on which refugee camps are built is owned privately and land tenure arrangements need to be clarified in order for residents to be assured of retaining the value of substantial improvements. This is a major issue that will need to be addressed. Land values vary greatly in the study region; at one end of the range are urban sites with commercial value and sites near the Mediterranean in Gaza; at the other end are remote rural sites. In the absence of comprehensive information on land ownership and prices by area, land costs estimates in this paper are only indicative. Indicative camp land costs for upgrading range from as low as $200,000 per 1,000 people (using a low land cost, minimum level of upgrading, and no change in camp densities) to as high as $1.2 million per 1,000 people. Prices for urban development sites also vary greatly, and there is little history of large-scale land transactions for urban development. The land costs per thousand people would be in the order of $720,000 for Option 3 Module A, and $450,000 for Module B (which accommodates more people in the same area). Option 4 assumes a large remote site, where land values may be in the order of $2 to $5 per square metre. Taking the upper end of this range gives land costs in the order of $240,000 per thousand. Cost estimates for the various options can be refined further as specific sites are considered.

Table 8.3: Estimated costs (US$ per 1,000 people) for on-site public and social infrastructure*

Indicative costs for housing and land are given in Table 7.4. Housing construction costs are very large relative to on-site infrastructure costs. From Tables 7.3 and 7.4, it can be seen that the ratio is generally higher than ten to one for both upgrading and urban expansion.

Report (A) provides a framework for discussions of options and broad 'order of magnitude' costs. The framework is capable of additional calibration as and when more detailed information becomes available, and can be used for further development as opportunities emerge. The figures and assumptions need to be used with discretion, bearing in mind their fairly severe limitations.

Aggregate costs

The costs in Tables 7.3 and 7.4 are additive – the total cost of, for example, upgrading a camp, or developing a new urban expansion module, would include the costs of the public infrastructure, the social infrastructure, and the land and housing costs, as appropriate. Using Tables 7.3 and 7.4, cost estimates for various scenarios can be broadened to allow 'order of magnitude' housing and land costs to be added to the public and social infrastructure costs.

LAND AVAILABILITY AND OFF-SITE INFRASTRUCTURE COSTS IN THE WEST BANK AND GAZA

Background

The Phase II analysis looked at the potential for, and costs of, accommodating some returnees on public land in the West Bank and Gaza

Table 8.4: Indicative costs (US$ million, per thousand population), for housing and land

Note: Figures in Table 7.4 do not include any contingencies.

(a) Estimated costs are based on those observed in Jordan. Construction costs are higher in the West Bank and Gaza. Indices for these locations are estimated at 1.5 and 1.35; the index for both Syria and Lebanon is estimated at about 0.85.

(b) The 'base case' land costs for camps is $20 per square metre.

(c) The low and high land cost figures for camps are $10 and $40 per square metre, respectively.

(d) The figures for all the upgrading forms, except Type 1, include the costs of relocation. Relocation costs per thousand 'relocatees' are based on the costs per person of urban expansion, Module A.

following a political settlement. Consultants, co-ordinated by the Ministry of Planning and International Cooperation (MOPIC), studied public land availability and the off-site water, wastewater and transportation requirements (that is, the more binding constraints to accommodating new residents) in several types of selected study locations in the West Bank and Gaza. The study locations were representative and geographically diverse – initially including nine (existing) urban centres with possible expansion areas; two potential 'satellites' (existing villages or towns within commuting distance from larger urban areas); and three 'new town' sites.

The study did not attempt to estimate the overall absorption potential of the West Bank and Gaza. Rather, it estimated the cost of absorbing 100,000 to 200,000 new residents on public lands located in and around existing study towns and in a limited number of new town areas. Among the main limitations on the study's scope were: (a) only selected sites were included – the study did not address all public land in the West Bank and Gaza; (b) private land was not considered¹⁰; (c) no other aspects of accommodating new residents were addressed beyond land, housing, and some related infrastructure; and (d) only capital costs were considered.¹¹

The existing situation

This section briefly describes existing conditions in the West Bank and Gaza, giving context to the analysis of off-site infrastructure needs. However, the information is illustrative. The methodology used for the study can be applied in other locations.

Water and wastewater service levels

Water demand in the West Bank and Gaza is suppressed as a result of both limited natural supply and artificial constraints, that is, restrictions on the development of new sources and infrastructure. Present water supplies are far below those needed. Consumption in the inland region, for example, for the 86 per cent of the population connected to a piped system, averages about 50 litres per person per day, about half the recommended World Health Organization (WHO) minimum for house connections in small communities. In areas without piped networks, consumption rates are considerably lower. The gap between water supply and water demand is increasing, due to population growth and increasing irrigation and industrial use, as well as increasing usage per capita. Wastewater treatment facilities at four operational plants serve nearly 15 per cent of the population; and most Palestinian localities, including some large towns, do not have sewerage systems. In the 19 localities with sewerage systems, many are partial. In the West Bank, about 60 per cent of houses in large municipal communities are connected to sewerage systems. The situation in the refugee camps is worse; in many camps, wastewater is channelled into open drains until it flows into either a sewerage network in a nearby city or is simply transported outside the camp boundaries. There are now three operating wastewater treatment plants in the West Bank (at Jenin, Tulkarm and Al-Bireh), and two non-operational plants at Hebron and Ramallah.

Transportation

The transportation system in the West Bank and Gaza is primarily the roadway network.¹² The total paved roadway length is about 5,900 kilometres, of which about 5,200 kilometres are in the West Bank, and 700 kilometres in Gaza.¹³ Just over half of the roadway length is paved, and over 50 per cent of the roadways in the West Bank and Gaza are in poor condition. The cost of expanding and improving the system has been estimated at about $1 billion. The connection between the West Bank and Gaza is through 40 kilometres of Israeli land.¹⁴ All in all, the roadway system is inadequate: poor roadway conditions and poor design and capacity limit accessibility between smaller population centres, and between larger population centres and smaller ones.

Public land availability in the West Bank and Gaza

Analysis was limited to public and waqf lands in the study areas.¹⁵ The study areas were geographically diverse, and consistent with the regional plans for West Bank and Gaza. They should be viewed as illustrative, and should not be construed as representing any relocation decisions by either households or government agencies. The study areas were:

• Nine urban centres with possible expansion areas: Jenin, Nablus, Tulkarem, and Tubas in the North; Al-Jiftlik and Jericho in the East; Al-Bireh and Bethlehem in the middle region; and Hebron in the South. Seven of the nine urban areas are regional/district centres; Tubas and Al-Jiftlik are local centres.
  
  
• Two satellite villages/towns: Beitunya, west of Ramallah; and Tarqumia, west of Hebron.
  
  
• Three potential 'new town' sites: one in the northern part of the Jordan Valley; one west of Jerusalem/Ramallah in the Latrun area; and one in the southeastern part of Gaza, near Rafah airport.

Basic information on land ownership had to be compiled for the study, because much of the Palestinian land, especially in the West Bank, is not fully registered. The 11 (existing) study towns and satellite villages in the West Bank are estimated to be capable of absorbing around 300,000 immigrants by the year 2010, under the assumptions that all topographically suitable land that is not contra-indicated (for environmental or other reasons) is considered, and land ownership is not taken into account. However, based on information gathered from the Surveying Department at the Ministry of Housing, public land within or adjacent to urban or village centres is quite limited. Only five out of the eleven study towns – four of the towns and one of the potential satellites – have 'vacant' public lands sufficient to absorb a significant number of new residents.¹⁶ The remaining six study towns had marginal or no available public land. Table 7.5 lists the areas in the five towns with sufficient available public land.Waqf land was found to be largely either already utilized or of small size, and was therefore not pursued further.

Table 8.5: Vacant expansion areas and public land in study locations

Notes:

(a) Master plan area and urban expansion area according to regional plan.

(b) A dunum is 1,000 square metres.

For the three potential new town areas, the final site locations for the study are based on availability of public land and site suitability. Table 7.6 shows the areas of public lands available in the three selected areas.

Table 8.6: Available public land in the new town sites

Accommodation potential: West Bank and Gaza

Individual pieces of public land in the five remaining study towns and three new town areas were plotted, and locations were reviewed for land use restrictions and suitability of topography.¹⁷ The suitable land areas were then analysed for their ability to accommodate new residents, taking into account guidelines related to population growth, land utilization density and urban expansion areas, and the zoning and building requirements in each location.

Three scenarios were constructed for the five existing towns and villages using different assumptions for land utilization (horizontal expansion) and type and height of buildings (vertical expansion):

• Scenario 1: Available public land is used to its maximum; i.e. depending on zoning requirements, maximum allowable construction percentages and number of floors is assumed, resulting in the highest possible number of new residents accommodated.
  
  
• Scenario 2: Only 50 per cent of available public land is used; however maximum zoning requirements for each plot is assumed.
  
  
• Scenario 3: All the available public land is used; but housing types are mixed – a combination of single houses and multi-storey buildings is assumed. Gross land utilization per person, for housing purposes, is assumed to be 24.4 square metres, double the overall average of 12.2 square metres for public housing projects.

Depending on the residential density assumed, and on whether sites inside and/or outside municipal boundaries were included, it was found that these five existing towns/villages could absorb from around 51,000 to around 211,000 new residents on publicly owned land. Table 7.7 shows results for two of the three density scenarios.

Table 8.7: Potential for accommodating new residents on public land in or near existing towns

The three new town sites were estimated to be able to accommodate some 130,000 to 165,000 people on public land.¹⁸

Table 8.8: Potential for accommodating new residents on public land in new towns

Off-site infrastructure investment costs

Water and sewerage

In order to estimate the investment costs of providing water and wastewater facilities for the benefit of returnees to the West Bank and Gaza, several underlying assumptions were necessary, an important one being that service levels in the study towns, which are currently far below generally accepted norms, would increase gradually. This decision was based on equity as well as practical considerations; the study could not simply make the assumption that service levels for returnees would be substantially higher than for the existing populations in the same study towns. The underlying assumption is, therefore, that domestic consumption would increase from the current average of around 75 litres per capita per day (l/c/d) to an average of 126 l/c/d in 2010 (a level still substantially lower than the WHO average of 150 l/c/d). The analysis considered the investment needed to ensure this level of water (and related wastewater) service levels for existing populations as well as for returnees, taking natural growth of both into account.

For planning purposes, the important costs are therefore those of upgrading and expanding the whole system for a given town, to accommodate both the existing population and any returnees. The 'investment cost per returnee' for water and wastewater facilities, which ranged from around $1,150 to around $1,700 for the existing study towns, and around $1,800 for new towns, relates only to the additional cost of accommodating returnees, but should be used with reference to the costs for existing residents, as the underlying share of investment 'for the returnees' is not meaningful in isolation. For existing populations, the cost per person for water and waste-water ranged from about $800 to about $1500. Estimated water and wastewater costs are shown in Tables 7.9 and 7.10.

Roads

Limited information on traffic was available, and it was beyond the scope of the study to generate original data. Moreover, the current situation is very different from the traffic patterns that would prevail once conditions allow substantial numbers of Palestinians to return. Analysis was limited to the assumed access roadway linking the potential residential development areas in each study site to the existing roadway network and the associated intersections. The average road construction cost varied from a low of around $6 per person under a maximum density scenario in Jericho, to over $200 per person for a mixed housing use scenario in Tubas. For new town areas, the average per capita costs ranged from a low of about $160 per person in Gaza, to highs of $400 to $700 per person in the northern Jordan valley (Table 7.9).

COMBINING PHASE I AND PHASE II ANALYSES

Infrastructure (public and social)

The Phase II studies summarized above provide cost estimates for off-site water, wastewater and road infrastructure and housing for various densities and types of housing development for returnees on public land in the study sites. With additional assumptions, these can be combined with the costs of on-site public infrastructure (water and wastewater, roads, electricity, etc.) and social infrastructure (schools, health clinics and community buildings) estimated in the Phase I analysis of infrastructure costs and outlined above, to provide a more complete estimate of the total costs involved in accommodating new residents.¹⁹ As noted, this methodology can be extended to other locations where returnees might settle.

Table 8.9: Summary of illustrative infrastructure cost estimates for new residents in study areas (US$/person) ^(a)

(a) These estimates do not include the estimated cost of upgrading water and waste-water infrastructure for existing residents – and should be used only in conjunction with these costs (see Table 7.10).

(b) Average per capita road costs, using Scenario 3 for existing towns, and Scenario 2 for new town areas.

(c) Figures are based on cost estimates for urban expansion module A and for a new town, from Sections 2 and 3 of Report (B). Module A, with a planned capacity of some 400 persons per hectare, is more akin to the Phase II density assumptions than Module B; and the new town assumed population of 50,000 is closer to the potential/illustrative number of returnees in the Phase II analysis. The Phase I figures have been adjusted (i) for the West Bank and Gaza (50% and 35%, respectively); (ii) to include contingency (15%); and (iii) for the new town sites, to exclude the estimated bulk water costs from the Phase I analysis.

(d) does not include land, housing construction, off-site electricity infrastructure, or any recurrent costs.

The cost estimates can be combined in various ways, depending on the underlying assumptions. Table 7.9 shows an example; however, the estimates in Table 7.9, do not include the estimated cost of upgrading water and wastewater infrastructure for existing residents, and are shown only to illustrate how the more relevant figures in Table 7.10 were derived.

Table 7.10 applies the per person costs from the last column of Table 7.9 to an illustrative number of returnees – in this case, using density Scenario 2 (not shown in Table 7.7) which assumes use of 50 per cent of available public land for housing, and maximum zoning requirements for each plot) for the existing study towns. The medium density scenario is assumed for new towns. Column (4) shows the estimated cost of upgrading water supply and wastewater infrastructure for existing residents, to obtain the more relevant figure for total estimated cost. Column (5) then shows the total cost per 1,000 returnees. For planning purposes, a figure of $3–6 million per 1,000 returnees might be used, which includes the costs of upgrading water and wastewater services of those currently living in the towns. It should be noted that the figures for existing towns in Column (5) include the costs of upgrading water and wastewater services for existing residents, and that the estimated costs for new towns do not take into account any considerations related to building viable new communities: the figures for existing towns are therefore not comparable to the estimates for new towns in the same column. The costs for other density scenarios can be calculated similarly.

The cost estimates can be combined to yield illustrative estimates of the total costs per person; and ranges of possible costs can be estimated by using various assumptions about density or about using land inside or outside municipal boundaries, etc. Some of the important limitations in scope have been outlined above. It should be emphasized that the estimated infrastructure costs for new towns do not take into account the significant risks in planning a new town or city; for example, the risk that new industry will not be attracted, creating pockets of high unemployment (i.e., an urban slum) at some distance from other towns. An additional important caveat is that the figures used in this study have reference to a more stable period prior to the devastating impacts of the current political situation; and the cost estimates would need to be reviewed before further use.

Table 8.10: Illustrative cost estimates of infrastructure for new residents in study areas, including costs of upgrading existing water/wastewater infrastructure for existing residents

Notes:

(a) Estimated costs do not include land, housing construction, off-site electricity infrastructure, or any recurrent costs.

(b) This illustrative table uses Scenario 2 (use of 50% of available public land, and maximum zoning) for the existing study towns, and the medium density scenario for new towns.

(c) The 'total cost for returnees' is calculated as the product of the numbers in the two preceding columns.

(d) From Table 16 in Report (B).

(e) For existing towns, includes the cost of upgrading water supply and sewerage for existing residents. Note that figures for existing towns are not directly comparable with those for new towns.

Housing costs

Comparison of Phase I and Phase II estimates

Housing costs were estimated in both Phase I and Phase II, and the analyses were carried out independently of each other.²⁰ The Phase I analysis looked at the cost, in Jordan, of 120 square metres of built accommodation per household for new housing in urban expansion areas, towns and cities, and in redeveloped areas (upgrading, Types 4 and 6). The 120 square metre standard corresponds to modest housing, in line with 'typical' housing in the region.²¹ It accommodates a living room, three bedrooms, and kitchen and bathroom for a six to seven person household, and is typical of the 'final' accommodation that a household with a median (or slightly lower) household income builds, incrementally, as resources allow.²² Construction costs were estimated to be in the order of $200 per square metre in Jordan, that is a cost of about $27,600 per house.²³ This figure would be $41,400 in the West Bank (or around $6,000–$7,000 per person), and $37,260 in Gaza, using the assumed adjustment factors of 50 per cent and 35 per cent. Similarly, adjustment factors can be applied to other locations.

It was roughly estimated that the costs of expanding, rebuilding, or upgrading housing in the camps would be about 65 per cent of the new housing cost.²⁴ This results in a cost of about $18,000 ($27,000 in the West Bank, and $24,300 in Gaza) for upgrading each existing house. In order to estimate complete costs per 1,000 people, the costs of accommodating relocatees in new housing would also need to be considered.

In the Phase II analysis, which was carried out about a year later, housing construction costs were based on initial cost estimates from recent housing projects in the West Bank and Gaza, and ranged from around $6,800 to around $7,500 per person, depending on location and density (Nijem 2001: Appendix II). The housing cost estimates from the two Phases of the study are thus roughly consistent.

Given the consistency of the housing costs estimates, and since the Phase II estimates are both more recent and more detailed, they are used in Table 7.11 to illustrate the effects of adding the costs of housing to the various infrastructure costs to get a more comprehensive view of the overall costs. Table 7.11 demonstrates that the cost of housing is by far the largest element, often close to double the sum of infrastructure costs and costs of schools, etc., combined.

Table 8.11: Illustrative cost estimates of infrastructure and housing for new residents in study areas

HOUSING FINANCE OPTIONS

Given the magnitude of housing construction costs, it is clearly most unlikely that the full costs of housing construction and upgrading could be borne by any external source. Moreover, if a decision were made for the public provision of housing in a situation of insufficient funds, issues of locational incentives and equity would arise, as only a relatively small proportion of households could be accommodated. Another approach involves not funding housing construction directly, but providing lump sum payments and allowing individuals to build their own units. This would be more welfare-enhancing, but the provision of sufficient funds for a complete housing unit would require severe rationing, and would not remove the difficult equity question. A third, and perhaps most realistic approach, reflecting the reality of limited funds for housing construction and/or upgrading, would focus on funding infrastructure, and supporting public sector authorities in facilitating both an adequate supply of housing and households' access to housing finance.

Experience in many countries has shown that public housing construction often does not reach the intended beneficiaries, and that by far the most important part of the capital funding for new homes or for shelter improvements comes from households themselves, either up-front from accumulated savings, or through loan repayments.²⁵ However, public sector authorities have a crucial role to play in easing constraints in housing supply, in housing finance, and in administering any subsidies to needy households. Israeli experience in accommodating immigrants confirms the importance of addressing supply constraints, and shows that measures to treat housing supply at large have been more successful than those focusing on a particular group.

Housing market conditions in the West Bank and Gaza and housing policy priorities are briefly summarized below, followed by an outline of some options that could be considered by donors wishing to assist, whatever the locality.²⁶

Housing in WBG

Housing demand in WBG is largely driven by a very high natural population growth rate. There may also be considerable pent-up demand, as evidenced by over-crowding in some levels of the market. The high natural growth rate predominates, even under the assumption of a large inflow of refugees. Housing finance is not well developed, and there is still little long-term financing available for homebuyers, despite the successful start-up of the Palestinian Mortgage and Housing Corporation (PMHC). Commercial bank finance is limited to short-term loans for housing developers, whose operations remain limited in scale. Efforts to develop mortgage finance have begun, for example through PMHC, but are still at an early stage.

Construction is very important to the Palestinian economy, with construction investment accounting for about 75 per cent of private investment, and about 22 per cent of employed people working in construction. Lack of access to construction work in Israel has been a main cause of unemployment in the West Bank and Gaza.

The housing policy reform priorities are to remove the constraints which keep construction costs high, especially in land supply, infrastructure services, and planning and construction standards. On the demand side, there needs to be an increase in the availability of finance for consumers and developers. Efforts to increase the availability of housing supply and housing finance should focus on low-income households. However, to make a returnee housing programme viable, it is crucial to lower the costs of publicly supported housing solutions and to increase cost recovery, in order to gain sufficient programme reach. Measures to stimulate the supply of low cost units, both for rent and for sale, should be given priority, and constraints preventing the conversion of existing units to low-cost units should be addressed.

Programme options

Experience has shown that competing objectives should not be addressed in one comprehensive programme. Distinct subprogrammes are suggested, with the individual goals of:

• Mitigating property loss incurred during past conflict phases;
  
  
• Providing housing solutions based on need; and
  
  
• Stimulating additional housing production where returnees are likely to settle.

Given the size of the refugee population, the property loss mitigation goal is likely to create strong competition for resources with the housing policy goals. The housing finance paper, Report (C), proposes a vehicle for reaching compromise: its design principles include incentive neutrality for refugees with regard to the decision to move; consistency with local housing policy and the reform agenda; and efficiency of design and administration. It also allows donors to choose which sub-programmes to support.

Figure 8.1 Returnee housing programme, design for the West Bank and Gaza

Note: dotted lines indicate potential instruments

The proposed programme, based on the design features above, includes 'baskets' or sub-programmes, as alternative funding options available to donors.

Within such a programme of 'baskets' for donors to select, the proposed eligibility requirements and benefits might include:

• In the first sub-programme, some refugees could receive a grant benefit based on their legal status.
  
  
• The second sub-programme proposes housing assistance on a grant basis. An important use of assistance on a grant basis could be for housing itself. However, it is proposed that only those fulfilling general pre-specified wealth and income limits could receive this assistance, and that domestic residents with housing needs who also satisfy the wealth and income limits would also be eligible. With this instrument, returnees and residents in need would be enabled to choose among a limited range of solutions in the housing market, including using the grant towards rent or housing purchase down payments. This type of assistance could also be used for relocation/reintegration, for example, reimbursing moving costs for refugees and displaced persons who decide to relocate.²⁷
  
  
• In the third sub-programme, a selection of housing finance programmes could be made available to enable all households in a destination country, regardless of their refugee or housing beneficiary status, to upscale their housing solutions. Short-term and micro-credit programmes would need to be introduced for households that cannot be absorbed by the rental market, and that have a low debt service capacity.
  
  
• The housing demand enhanced by these three sub-programmes could be supported by a fourth sub-programme to stimulate the supply of low-cost units. This could, for example, be specifically geared towards investment into land conversion and development, including funding for infrastructure, etc.

For equity reasons, the proposed instruments in the second and third 'baskets' would be available for low-income residents as well as returnees, but not to high-income households.

NEXT STEPS

The analyses summarized in this paper have necessarily been limited, both in the initial selection of study areas, and in investigating only public land sites. It has also been limited to a few geographical areas, but could be expanded to apply to other locations. The results, although helpful in identifying the likely orders of magnitude of the capital costs involved, fall far short of providing a blueprint for ensuring that sufficient infrastructure will be in place, and that appropriate and equitable housing solutions will be available, as the need arises.

There are several potential directions for further studies:

(a) Widening the investigation to additional towns with absorption potential. MOPIC now has the methodology to extend this work to other locations in the West Bank and Gaza not included in the original study; in particular to identify where there is additional public land.²⁸ In fact, the methodology can be applied to any location inside or outside the West Bank and Gaza.

(b) Planning pilot projects in one or two of the study areas already identified as having available public land. This would serve as a focus for identifying any policies, procedures, and specific actions required to provide infrastructure and ensure housing availability for accommodating new residents.

(c) Investigating how private land could be brought into use for housing on a larger scale. This may include a review of availability of private land within and near urban areas, the size of parcels, etc., and could also build on the initial review of the legal and institutional framework summarized in the consultant's paper (Nijem 2001).

Further discussion of some of the issues raised in connection with the analysis already carried out would help to move the work forward and avoid delays when the time comes for designing programmes to accommodate returnees. Issues to be discussed could include:

• Possible incentives for municipalities to provide the various infrastructure or other facilities needed to attract and accommodate refugee or displaced households, within an overall policy framework of improved housing market operations (particularly targeting low-income families) and infrastructure service provision, also benefiting existing residents;
  
  
• The role of the public and private sectors in construction of infrastructure and housing; and
  
  
• The types and extent of subsidies (explicit and implicit) in the various options for providing housing and infrastructure. The subsidies need to be sufficient to act as an incentive to ensure the full co-operation/participation of municipalities, but need to take into account the limited availability of financial resources.

BIBLIOGRAPHY

Asa'd, A.K. and Jayyousi, A. (2001) Water and Wastewater Sector Investment for Refugees, Washington, DC: World Bank.

Nijem, K. (2001) Absorption Capacity in the West Bank and Gaza Governorates: Public and Waqf Land, Washington, DC: World Bank.

World Bank (2000) Infrastructure and Housing Costs: Technical Note, Washington, DC: World Bank.

_____ (2002) The Absorption of Refugees in the West Bank and Gaza: Potential for Housing Accommodation on Public Land in Selected Study Areas, Washington, DC: World Bank.

_____ (2002) Housing Finance for Returnees: Issues and Policy Options, Washington, DC: World Bank.

Zeidan, K. (2001) Estimating the Roadway Costs Associated with Absorbing Palestinian Returnees to the West Bank and Gaza, Washington, DC: World Bank.

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