Dasgupta, BasabLall, Somik V.2012-06-262012-06-262006-08https://hdl.handle.net/10986/9292Slum upgrading programs are being used by national and city governments in many countries to improve the welfare of households living in slum and squatter settlements. These programs typically include a combination of improvements in neighborhood infrastructure, land tenure, and building quality. In this paper, the authors develop a dynamic general equilibrium model to compare the effectiveness of alternative slum upgrading instruments in a second-best setting with distortions in the land and credit markets. They numerically test the model using data from three Brazilian cities and find that the performance of in situ slum upgrading depends on the severity of land and credit market distortions and how complementary policy initiatives are being implemented to correct for these problems. Pre-existing land supply and credit market distortions reduce the benefit-cost ratios across interventions, and change the rank ordering of preferred interventions. In the light of these findings, it appears that partial equilibrium analysis used in typical cost-benefit work overstates the stream of net benefits from upgrading interventions and may in fact propose a misleading sequence of interventions.en-USCC BY 3.0 IGOACCOUNTINGAVERAGE COSTSBANK LOANSBANKING SECTORBANKSBASIC SERVICESBUILDING MATERIALSCITIESCONSTRUCTIONCOST EFFECTIVENESSCREDIT RATIONINGDECISIONMAKINGDEFAULT RISKDEPOSITSDEVELOPMENT AGENCIESDEVELOPMENT PROJECTSDWELLINGDWELLING UNITSECONOMIC PERFORMANCEELASTICITYELASTICITY OF SUBSTITUTIONENVIRONMENTAL ECONOMICSEQUILIBRIUMEQUILIBRIUM ANALYSESFINANCIAL INSTITUTIONSFINANCIAL SERVICESFINANCIAL STABILITYGOVERNMENT INTERVENTIONHABITATHOUSINGHOUSING FINANCEHOUSING MARKETHOUSING MARKETSHOUSING POLICYHOUSING PROGRAMSHOUSING RIGHTSHOUSING STOCKHOUSING SUPPLYHOUSING UNITSHUMAN SETTLEMENTSINEFFICIENCYINTEREST RATEINTEREST RATESLAND DEVELOPMENTLAND MARKETLAND PRICESLAND SUPPLYLAND SUPPLY CONSTRAINTLAND SUPPLY CONSTRAINTSLAND TENURELAND TITLINGLAND USEMARGINAL BENEFITSMARGINAL COSTMARGINAL UTILITYMETROPOLITAN AREASMETROPOLITAN REGIONSMUNICIPALITIESNATIONAL HOUSING POLICYNEIGHBORHOODOPTIMIZATIONPARTIAL EQUILIBRIUM ANALYSISPRICE INDEXESPRODUCTION FUNCTIONPROFIT MAXIMIZATIONPUBLIC FINANCEPUBLIC SERVICESREAL ESTATERESETTLEMENTRESOURCE ALLOCATIONROADSSAVINGSSCHOOLSSEWAGESLUM AREASSLUM IMPROVEMENTSLUM UPGRADINGSLUMSSUB-SAHARAN AFRICASUBSIDIZED HOUSINGSUBSTANDARD HOUSINGTAXATIONURBAN DEVELOPMENTURBAN LANDURBAN POORURBAN POPULATIONURBAN UPGRADINGUTILITY FUNCTIONWASTEWASTE COLLECTIONWATER SUPPLYZONINGWorld Bank10.1596/1813-9450-3993