Low Cost Strategies for Reducing Urban Poverty

Eric Jaffe reports, “[a] recent field test in Mexico offers the first experimental evidence that basic infrastructure upgrades — in this case paving streets — have a measurable effect on reducing urban poverty.”

Read Time: 1 minute

November 15, 2012, 11:00 AM PST

By Erica Gutiérrez


A street paving pilot project carried out in Acayucan, Mexico, shows a promising, and relatively low cost path for improving life in the developing world. Published in September, the results of a study [PDF] conducted by Marco Gonzalez-Navarro of the University of Toronto and Climent Quintana-Domeque of Universitat d'Alacant showed that simple street paving led to, "a substantial reduction in material poverty."

"Pavement projects boosted housing wealth, which boosted credit use, which boosted household consumption - all for a relatively low cost," writes Jaffe. These findings are based on a comparison of surveys carried out amongst households in communities in 2006, before paving was finished, then conducted again later in 2009. Factors taken into account included monthly expenditures on household items and durable goods, as well as credit usage, loan acquisitions, and changing property values.

"The researchers believe this newfound wealth, tied closely to credit use, was the result of increased home values created by the street surfacing," says Jaffe. "Professional appraisers found that properties along the paved streets rose 16 percent (with land values climbing 54 percent), compared to those on unpaved streets. Rents were 31 percent higher on paved streets, and while there weren't enough home sales to create statistical significance, the trend was clearly toward higher prices - with paved homes going for 85 percent more than their unpaved counterparts."

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