Sao Paulo Research.

Jobless in Sao Paulo
Desperate Brazilians hit the streets before dawn in search of work. Some brand President Lula a traitor and a Pinocchio for his empty promises.

By Henry Chu, Times Staff Writer

SAO PAULO, Brazil — Not even the sun rises as early as Antonia Mariano. The stars are out and the streets deserted when she shuts the door behind her and catches a lonely bus downtown at 4 a.m.

The ride takes nearly 90 minutes. It's still dark and chilly when she reaches her destination — a queue that already snakes around a building and down the block. The line is led by people who camped out the night before or managed to arrive even earlier than she did.

Luckily, she is among the 240 supplicants who make the cutoff and get ushered inside the office of Brazil's largest workers union. Yet a few more hours will pass before she finds out whether there's any chance of getting what she desperately needs: a job.

Mariano, 48, has been searching for work for more than a year, after the graphics company for which she cooked and cleaned collapsed under a mound of debt. Week in and week out, she makes the rounds of Sao Paulo's union-run employment centers, then hits the pavement, passing out her resume from business to business, shop to shop. All she has earned so far are regretful shakes of the head and a pair of tired feet.

"It wears you out more than working," Mariano said. "When you go to work, you've got something fixed, you know where you're going. When you go out looking for a job, you just don't know whether you'll find anything."

Her plight seems endlessly replicated in this sprawling megalopolis, South America's largest, with a population of 18 million in the greater Sao Paulo area. Joblessness and despair beset the city that has long been the powerhouse of the Brazilian economy. Last month, the unemployment rate here hit 20.7%, the worst for any April on record, with 2 million people idle.

The bulging ranks of the unemployed form one of the biggest challenges — and threats — facing President Luiz Inacio Lula da Silva in the second year of his administration. A former blue-collar worker and left-wing activist, Lula was elected on promises that he would tackle Brazil's glaring social inequities and champion the poor and the struggling.

But he spent his first year as president proving to worried international markets that he would lead a fiscally responsible government, one that kept a watchful eye on inflation, paid back its loans and spent sparingly.

Most economists say Lula has successfully shown that Brazil won't suddenly go off the rails under his command. But analysts warn that patience is stretching thin among his political base, society's underdogs, who expect him to start making good on his vows to find them jobs and improve their lives.

"The government of Fernando Henrique Cardoso" — Lula's predecessor — "was well known for bringing monetary stabilization," said Marcio Pochmann, who heads the municipal department of development, labor and solidarity for the city of Sao Paulo. "The victory or defeat of Lula's government will depend on employment, not on inflation. Combating unemployment is a lot more difficult than combating inflation."

A winter of labor discontent now looms as pressure on the government mounts. At the end of March, thousands of protesters turned out in Sao Paulo and Rio de Janeiro to demand jobs, marching with banners and signs that read, "Wake up, Lula!" and "Where are our millions of jobs?"

Some label the president a traitor. One scathing political poster still taped to windows here depicts the Brazilian leader with a foot-long nose and calls him Pinocchio. Lula's approval ratings have plunged to their lowest in Sao Paulo, according to a poll released May 22.

May has been a month of walkouts, sympathy strikes or threats of job action throughout Brazil by unions pushing for higher wages and better benefits, groups representing civil servants, federal prosecutors, tax auditors, schoolteachers and auto workers, among others. The federal police have been conducting work slowdowns and stoppages since March, tying up airport and customs operations.

Demonstrations have also erupted over the government's increase of the minimum wage, from $80 to about $87 a month, which critics scoff at as laughably meager.

Stung by accusations of having abandoned his core supporters, Lula has been put on the defensive. He made a public appeal for understanding, saying that he wished he could offer a bigger boost to the minimum salary but that he was held back by hard financial reality.

"The minimum wage is a clear demonstration of how Lula is convinced that there are budgetary constraints, that political will is not the only element in the decision-making process," said Mailson da Nobrega, a former finance minister.

Previously, "he thought it was a question of political will — 'When I come there, I'll do everything in favor of the poor' — but now he has come to the conclusion that things are more complicated," said Da Nobrega, a partner in an economic consultancy here.

Sao Paulo began hemorrhaging jobs long before Lula took power. Once Brazil's industrial showcase, the city has been undergoing a painful transition to a deregulated service economy. In 1980, industry accounted for 40% of the jobs; now the figure is 15%. Factory jobs have been lost to other, cheaper parts of the country, to foreign lands and to Brazil's burgeoning agribusiness sector.

Tens of thousands of workers, many of them poor, unschooled migrants from the north who streamed down here to assemble toys or stitch shoes during the manufacturing boom of the 1960s and '70s, were thrown out of work. Population growth continues to outstrip economic growth, while the jobs coming online now require more complex skills and better education than most of these workers have.

"The type of jobs being created don't match these people's profiles," Pochmann said. "They have work experience, but for very simple jobs."

The unemployment crisis in Sao Paulo is the worst in 70 years, he said; in one hard-hit section of the city, to the east, the jobless rate climbs as high as 40%. That helps produce such grim statistics as the nearly 600,000 households — or about 2.5 million people — that live below the poverty line in greater Sao Paulo, meaning a family of four subsisting on less than $5 a day. The growing economic despair has been linked to Sao Paulo's alarming rate of violent crime, one of the highest in the world, Pochmann said.

Applicants form giant queues to vie for a coveted spot in a job-retraining course or for some temporary work, however low-paid. When the suburb of Guaruja advertised a handful of openings for street cleaners and other menial jobs that paid only the minimum wage, more than 9,000 people showed up to compete.

Such scenes are also commonplace in other Brazilian cities, such as Rio, Brasilia, Recife and Salvador — the last two suffering from even higher unemployment rates than Sao Paulo. The national unemployment rate in April was 13.1%.

Government and some private economists are optimistic that the economy will pick up steam in the second half of the year. Purchasing power and Brazil's trade surplus are on the rise. Da Nobrega's consultancy forecasts economic growth this year of a respectable 4% and a net creation of jobs of 2.5%.

Ivaldo Felix can sweat it out a little more — but not much. Out of work for two months, the 43-year-old estimates that his family can survive for about four more months on his unemployment insurance and his wife's earnings as a seamstress before things get desperate.

Pinching every centavo means he can't afford to spend the $2.60 in transportation costs to come to downtown Sao Paulo every day, among the gleaming skyscrapers, to seek employment as a building maintenance worker. On the days he does come, often nothing is left over to buy anything to eat or drink.

He's willing to learn new skills — "even pilot a plane," Felix said with a laugh. But an eighth-grade education doesn't go that far nowadays, and his regular visits to union job-placement centers have proved fruitless.

"You leave your house at 4:30 in the morning, you take two modes of transport to get here, you line up for five hours, and then the attendant says, 'We have no jobs for you,' " he said. "You want to hit him, but you don't. You just go home and wait another day."

By Mario Osava*

If Latin America's major cities, like Sao Paulo and Mexico City, don't enact policies for conservation and efficient use of water, they will soon have to ration this vital liquid, warn experts.

RIO DE JANEIRO - Brazil and Mexico's mega-cities are devouring as well as contaminating their water resources, and forced to seek increasingly distant supplies. But experts stress that the problem is not scarcity but rather widespread waste.

"It is essential to reduce excessive consumption," Brazilian expert Aldo Rebouças told Tierramérica. He said "management of demand" is the only way out of the water supply crisis in the Sao Paulo metropolitan region, which could face rationing in the coming months.

The threat has been looming since last year over the 18 million residents of the greater Sao Paulo area, which comprises 38 municipalities. Torrential rains during the southern hemisphere summer caused many floods, but did not reduce the water supply problem.

The rains were more intense in flood-vulnerable low-income districts than in the areas that most needed it and which feed the reservoirs, in the Cantareira sierra.

The Cantareira system of dams, which supplies half the metropolitan region, is at just 17 percent its total capacity and would have to reach 40 percent by the end of the month to stave off rationing, say the technicians at the Sao Paulo state sanitation company, SABESP.

They decided -- "a last-ditch attempt to prevent collapse" -- to offer customers who reduce consumption by at least 20 percent a proportional discount in their water bills over the next six months.

SABESP has a production capacity of 68 cubic meters of water per second (m3/s) for the metropolitan region, but cut back to 61 or 62 m3/s in the last few months, Francisco José Paracampos, planning and distribution superintendent, told Tierramérica.

Because of the scant margin, vulnerable to the smallest drought, the public enterprise, which holds a monopoly in Sao Paulo over water distribution is drawing up plans to boost production by 12 to 15 m3/s over the next 15 years, said Paracampos.

That approach maintains a "culture of abundance", increasing supplies instead of promoting conservation and efficient use of water resources, says Rebouças, hydrology engineer at the University of Sao Paulo. Per capita water consumption today in greater Sao Paulo is 180 liters per day, but 100 liters would be sufficient, he adds.

The new projects are very costly because they rely on water supplies that are farther away from the city, with additional energy expenses for elevating the water to the Sao Paulo altitude of 800 meters above sea level, explained the expert.

But Paracampos disagrees: SABESP plans combine increased supplies with regulation of demand. Per capita water consumption in Sao Paulo "decreased 20 percent in the past six years," he said.

Problems similar to Sao Paulo's are found in the Valley of Mexico metropolitan area, comprising the Mexican capital and the neighboring state of Mexico, home to 20 million people at an altitude of around 2,240 meters.

The region is favored by abundant underground water resources, which cover 70 percent of the demand, but overexploitation has caused the land to sink as well as damage to buildings and infrastructure.

Extraction of water exceeds the natural recharging capacity of the aquifers by an estimated 50 to 80 percent, and official plans call for drawing even more water from them and from rivers that are farther away and at lower altitudes.

Furthermore, experts calculate that 35 percent of water supplies are lost in leaks throughout the distribution system.

If corrective measures are not taken, says the GEO (Global Environment Outlook) study by the United Nations Environment Program, the water deficit in the greater Mexico City area will be 21 cubic meters per second, the equivalent of 46 percent of consumption today.

Major investments are being made in the area's deep drainage system, which already has 153 km of tunnels, and is to add 39 km more by 2007 at a cost of 760 million dollars. The aim is to prevent flooding, an ongoing problem for a city that was built over what used to be a series of lakes.

Mexico City also suffers from serious institutional confusion, with more than 20 administrative bodies overseeing water resources. "There is a duplication of effort in management, contradictory policies between agencies in the same city," noted Manuel Perló, director of the University Program for City Studies.

In Mexico City and Sao Paulo alike, the authorities are carrying out campaigns to promote water conservation and reduced consumption. But in Mexico, subsidized rates for water utilities undermine that effort.

Crisis repeats itself in Sao Paulo with no effective change in strategy, according to Rebouças. The new projects entail pipes to distribute 250 liters of water per person per day, which, he says, is a waste-level volume.

Increasing the supply also implies additional costs in drainage, given that 80 percent of potable water ends up as sewage, Ivanildo Hespanhol, a University of Sao Paulo expert in water reutilization, told Tierramérica.

In addition to raising public awareness, water fixtures needs to be replaced. "In toilets, which represent 26 percent of residential consumption, the discharge could be reduced to six liters of water, one-third of the current volume, without losing efficiency," said Hespanhol.

Re-use of water could delay the need to tap new and distant sources, he said. It can be used in agriculture, in industries that are major water consumers, in street cleaning and in irrigating urban green areas.

Dozens of industrial companies are already using "used water" in greater Sao Paulo. But this new alternative "has to be imposed as policy," because the sanitation companies are not interested -- their bottom line would suffer due to the lower costs of reusable water, Hespanhol said.

. Urban Environment and Human Health

Box 2.4 Household Environmental Problems, Wealth, and City Size

Very large cities are often portrayed as environmental disasters, offering the worst of health conditions. Certainly, these so-called megacities suffer from serious citywide health threats such as air pollution. But there is evidence that household-level problems such as sanitation or indoor air pollution, which pose the most direct threat to human health, are actually less of a problem in mega-cities than in many of the smaller and poorer urban settlements.

Recent studies of Accra, Ghana (1), Jakarta, Indonesia (2), and Sao Paulo, Brazil (3), confirm that bigger is not necessarily worse. Sao Paulo (9.6 million population) is larger and wealthier than Jakarta (8.2 million population), which in turn is larger and wealthier than Accra (1.2 million population) (4). Even Accra can be considered relatively large, since about two thirds of the urban population in developing countries live in cities of less than 1 million residents.

When researchers compared a series of household environmental indicators (e.g., the availability of piped water or the presence of flies in the kitchen) in Accra, Jakarta, and Sao Paulo, the household conditions improved based on the relative wealth of the city. In all cases, household conditions were better in Sao Paulo than in Jakarta, and better in Jakarta than in Accra. (See .) Other detailed household statistics also confirm this trend. The most obvious explanation is the relative wealth of the three cities.

Indeed, as indicated in , similar patterns can be observed by looking across different neighborhoods of Accra. The wealthy neighborhoods of Accra seem to have roughly the same access to water and sanitation as the Sao Paulo average, whereas the middle-class neighborhoods are roughly comparable to the Jakarta average.

Managing Sao Paulo 

Reasons for rapid growth

 

• Rural-urban migration (push-pull factors)

• High birth rate 
• Low death rate leading to longer life expectancy 

 

Results of rapid growth

1. Inadequate housing and services. 40% live in shanty towns or favellas which display most problems typical of developing world cities. The makeshift homes lack sewerage, water and electricity.

2. The shanty town services are non-existent or incapable of maintaining a basic standard of living. The lack of basic services like a clean water supply, rubbish collection and sewerage disposal mean that the risks of disease are very high. In storms sewers block and flood.

3. Shortage of affordable formal housing.

4. The shanty town is likely to be found on inappropriate land. Maybe it is prone to flooding or is very steeply sloping, increasing the chances of a landslip. It could be on a piece of land that has been badly polluted by a neighbouring industry. The shelters made of wood and high population densities increase the risk of fire.

5. Collapsing infrastructure. The government does not have sufficient funds available to maintain the existing facilities, let alone improve them. Particular problems arise because of the inadequacy of the road and sewerage networks – see next point.

6. Increasing levels of pollution. Pollution of air, land and water is a major problem. Air pollution is second only to Los Angeles. The drive to industrialisation brings with it inevitable problems, especially as legislation to protect the environment is often non-existent or rarely enforced. Furthermore, the hidden economy can add to the levels of pollution as small, unlicensed industries are set up in peoples homes or on rooftops. These industries release their pollutants into the air, land and water.

7. Increased volume of traffic on poorly maintained roads.

8. A lack of employment means that people have to look for other ways of earning money in the informal sector. Lack of jobs - many work in informal sector - low paid, menial jobs e.g. porters, shoe shiners. Employs over half the city’s workforce.

 

Attempts to solve problems:

 

1. Clearance of the slums: In the past the authorities tried to clear the slums - people just moved elsewhere.

2. Site and service schemes: These are schemes whereby the government will provide a site (a small concrete ‘hut’) and basic amenities such as water and sewer facilities. The migrant is given rights of ownership and then expected to complete the work at his or her expense. This is often done as a cooperative between groups of migrants. In other situations, the authorities just provide the plot and building materials for the migrants to construct their own homes.

These schemes are relatively cheap and give the migrants a sense of control over their future. They also encourage community spirit.

3. Rehabilitation (Multiroes self-help schemes): An alternative to this scheme is to provide the residents of the shanty towns with the materials to improve their existing shelters. Residents are also encouraged to set up community schemes to improve education and medical services. Residents may also be given rights of ownership whilst local authorities come in and provide electricity, water and sewerage disposal. e.g. Favella Monte Azul

It is a cheaper option than the site and service schemes but simply hides the real problems. The germs may not have been removed, the land still unsuitable and the water/sewer system still not adequate.

4. Housing developments: Large areas of shanty towns were cleared, tower blocks built and the shanty town residents re-housed. e.g. Cingapura Housing Project

5. Charities: charity projects provide jobs and other benefits such as pensions and medical care. e.g. Focolare Movement

6. Transport: Transport - underground metro system - improves movement of people and reduces pollution, new roads, new train and bus services, pedestrianised CBD and parking restrictions.

7. Industrial estates: New industrial estates with water, sewerage and electricity are located close to the favellas to provide business premises and jobs

Corrosion in Brazil

The following map of the atmospheric corrosivity measured in Brazil was adapted from "Atmospheric Corrosion of Copper in Ibero-America" by M. Morcillo, E. Almeida, M. Marrocos, and B. Rosales, Corrosion, Vol. 57, No. 11, pages 967-980.

    

Air Pollution in Brazil

Air Pollution Air pollution in Brazil is mainly due to rapid urbanization in several cities that lacked the infrastructure to support rapid population growth. A recent World Bank study ranked the Brazilian cities Sao Paulo, Rio de Janeiro, Belo Horizonte and Curitiba as the four most polluted cities in the country.

The city of Curitiba has taken a unique approach in assuring that development can occur without adversely affecting the environment. Curitiba was one of the fastest growing cities in Brazil in the 1970's. The local government responded to pollution problems through initiatives aimed at shaping how and where growth could occur. Thus, although population has doubled since 1974, traffic has decreased by approximately 30%. The main goal of Curitiba's government was to reduce the population's reliance on cars. World famous innovations include dedicated busways, extra large buses for high density routes, tube shaped waiting areas where passenger fares can be paid in advance (similar to a subway system), and a major road network radiating out from the edge of the central city pedestrian zone. As a result of these innovations, Curitiba has reduced its consumption of fossil fuels and reduced air pollution.

Sao Paulo, Latin America's second largest city (behind Mexico City), experiences the same problems that many other large cities face when the population grows faster than the infrastructure to support it. Traffic congestion and pollution are two major problems affecting Sao Paulo. In 1989, 50% of city smog resulted from factories and 50% from motor vehicle emissions. In 1999, the percentages were 10% and 90% respectively. The same year, the local government instituted a pollution control program, whereby motorists are required to leave their vehicles at home one day a week. This system has reduced the volume of cars and cut daily emissions of carbon monoxide by at least 550 tons.

Sao Paulo's pollution levels are fueled by poor infrastructure , gasoline prices that are among the lowest in the world and inefficient automobiles. Government initiatives to improve environmental conditions in Sao Paulo include plans for an orbital motorway (expected to reduce city traffic by 20%), additional metro lines, and improvements to the rail system by 2002. ()

Sao Paulo River Cleanup

Reprinted from No-Dig America Supplement
No-Dig International
September 1998
© Mining Journal 1997/1998

ENVIRONMENT-BRAZIL: Air Pollution Control Improves in Sao Paulo

By Adalberto Wodianer Marcondes

SAO PAULO, Oct 18 (IPS) - A six-year-old programme designed to reduce air pollution in Sao Paulo - Brazil's largest city - produced its best results yet between May and September.

Officials such as Sergio Pascoal Pereira, deputy coordinator general of the programme implemented by the State Secretariat of the Environment, are confident that the effort to reduce exhaust emissions will keep air-quality levels within the acceptable range by the year 2000.

The traffic-restriction programme operates from Monday through Friday in greater Sao Paulo, home to around 17 million people. Cars are banned from circulation one day a week, depending on the last digits of their license plates. That means that if everyone respects the ban, 20 percent of cars remain parked every day.

There are some exceptions, such as taxis, ambulances and the cars of doctors and other professionals whose vehicles are indispensable to their work.

By the late 1970s, air pollution had become a serious problem in Sao Paulo, and mechanisms for measuring the air quality in each neighbourhood, a system of declaration of states of alert and consequent emergency measures began to be implemented.

The situation becomes particularly bad in the southern hemisphere winter due to ''atmospheric inversion,'' which leads to a decrease in the winds that normally disperse contaminating gases and particles in the air. Hence, the traffic restrictions are in place from May to September.

For years, the air quality in a number of neighbourhoods reached emergency levels in winter. During several winters, polluting activities had to be temporarily suspended, with factories shut down in a few industrial districts.

But thanks largely to the programme designed to reduce vehicle exhaust fumes, this year's air quality measurements were the best seen in years.

While air quality remained within acceptable levels 85.3 percent of the time from 1992 - when the programme was implemented - to 1996, that proportion rose to 96.1 percent last winter and to 99.1 percent this year, according to Pereira, one of the officials in charge of the programme.

An estimated 54,000 tonnes of carbon monoxide were kept out of the air by the progamme this winter, while the amount of ozone present in the stratosphere remained at acceptable levels during 99 percent of the period in question, according to a study by the Environmental Technology and Sanitation Company.

This year there were no recordings of bad air quality, which lead to the declaration of a state of alert. And unacceptable air conditions were only found 0.9 percent of the time in two stations in downtown Sao Paulo.

But Pereira pointed out that the results were not only due to more effective oversight and inspection and higher levels of compliance - which rose from 96.3 to 96.7 percent from 1997 to 1998 - but were also resulted from stepped-up collective efforts to reduce hazardous emissions.

''There was a gradual improvement in the vehicles circulating, because new vehicles must meet increasingly strict environmental standards, and emissions controls in industry are also more efficient,'' said the official.

Based on this year's results, Pereira predicts 100 percent success for the programme in the year 2000. He said there was no possibility that the effort would be eliminated in the near future, and added that it would continue for at least the next five years.

''Until then, we must promote the modernisation of public transport and the disciplined use of vehicles. Another factor that will contribute to protecting the environment will be the implementation of compulsory vehicle inspections starting in the year 2000, which will allow us to improve controls of vehicle exhaust fumes,'' he added.

In spite of increased compliance for the programme, the number of infractions more than doubled from 994,000 during last year's period of restrictions to 1.8 million this year.

Pereira explained that phenomenon by the increase in the number of vehicles circulating and the fact that the traffic restrictions were applied for the longest time period this year, 31 days more than in 1997. Another factor he mentioned was the improved performance of the 1,250 inspectors participating in the programme, ''who are better prepared now due to the experience they have acquired.''

Forty-four percent of the total number of infractions led to fines, which brought in 82 million reales (69 million dollars), the official added. But many of the infractions were committed by vehicles with authorisation to circulate, and ''a certain number of tickets are cancelled after drivers appeal.''

Part of the fines paid by drivers who violate the traffic ban goes to the municipalities covered by the programme. But all of the funds brought in through the fines must be channeled into environmental conservation projects, in accordance with Brazilian law.

A positive side effect of the programme has been a decongestion of Sao Paulo's infernal traffic. (END/IPS/tra-so/awm/ml/sw/98)

Sao Paulo: Cities of God, Cities of the Future

By John McIlwain
Senior Resident Fellow for Housing
The Urban Land Institute

August 2003

In the year 2007, it is projected, more than 50% of the world’s people will live in urban conurbations, i.e., cities and the urban regions around them. All large cities are growing, but the most growth is projected for the mid-size cities. The largest cities—the “megacities” with populations over 10 million—will grow slowly. The result will be more megacities on the planet as the world’s population, now some 6.9 billion, approaches stability at somewhere around 10 billion people in the latter part of the 21st Century.

Given this, what today’s megacities are like may be a predictor of the future of many global cities. In the United States, both New York and Los Angeles are megacities. Larger than these, however, is Sao Paolo, Brazil, the fourth largest city in the world, with a population currently estimated at between 18 to 20 million. Its population is only 10% to 20% larger than that of the New York City urban region, but its urbanized land area is less than half New York’s. This makes it far denser than any U.S. city. In addition, its edges are crisp in comparison to U.S. cities. Instead of endless suburbs of decreasing density slowly transitioning into semi- and fully rural areas, one drives past favellas (the crowded illegal, squatter communities that surround Sao Paulo) and industrial parks immediately into verdant hills free of houses, roads and development.

This is not necessarily due to better planning—Sao Paulo is just now completing its first master plan. It has grown rapidly since the early 1950’s, consuming the towns around it, without an overall plan. Now, for the first time, a new and innovative master plan is being finished that will, among many other things, allow for more mixed-use development.

The city itself is surprisingly livable, as most people live and work in the same area. Not to do so means fighting fierce traffic, which is one reason Sao Paolo, claims to be the helicopter capital of the world with 800 helicopters (the other reason is that those wealthy enough to own helicopters are also the ones most at risk of being kidnapped for ransom by Columbian and Bolivian guerillas). But even at rush hour, the experience of traffic is a lot like that in Los Angeles or Atlanta—except that the air in Sao Paolo is far worse.

The best housing is beautifully designed—Brazilians love exciting and unique architecture and will not buy pre-built single-family housing. Instead, if they can, they buy lots for cash paid over three to five years, and then hire their own architect and builder. The hitch is that house building is also done in cash, as mortgages are too expensive. Brazilian mortgage rates in August 2003 were around 12%, added to which is an annual inflation adjustment, currently 12%. (Both interest and inflation rates are well down from prior years.) Combine these high rates with a maximum 20-year term (longer than in prior years) and the fact that a minimum downpayment is 50%, and mortgages do little to help make homeownership affordable to the middle class. Interestingly, land developers, who usually sell lots directly to homebuyers, not to builders, do not work with lenders to help finance the building of a home.

Those who cannot afford a single-family home have three options, depending on their income. The more affluent buy condominiums in one of Sao Paolo’s many high-rises; the less well off buy small plots of land and build homes slowly over time by themselves; while the poorest move onto vacant land in a favella and build homes from discarded materials.

Condominiums are often beautifully designed and, like land, are sold for cash up front. Developers buy land, build sexy sales centers with models of units, and, when 60% or so of the units have been sold, begin construction—not unlike in the U.S. But there the similarity ends. Purchasers pay all cash, beginning with a deposit of 10% or so, and then make monthly payments over three to five years. Developers fund construction with the homebuyer payments, and generally do not use any bank financing.

Condominiums in Sao Paulo generally have three to four bedrooms, are often over 1,500 square feet in size, and have parking for three to four cars. Families in Brazil are almost twice the size of U.S. families on average, and all kids need cars as soon as possible as public transportation is limited and slow. Two other things all condos have in Sao Paulo – barbecues on an outdoor deck, and a small, closet-sized maid’s bedroom and bath.

Like single-family housing, there is little mortgage financing used to buy condominiums, and where it is used it is too expensive to make units more affordable. Yet, single-family houses and condominiums are inexpensive by U.S. standards, despite the fact that all construction is masonry (Brazilians think wood frame construction too fragile, not because of earthquakes but due to cultural choice). Condominiums in Sao Paulo run from $100 to $150 a square foot in the newer southern suburbs to $200 to $250 a square foot near the center, which makes them affordable by U.S. standards. Despite this, high unemployment and low wages make these homes available only to a small minority (for instance, the average construction worker makes about $120 a month).

This means construction workers, like many others, can’t buy most housing. Instead they buy small plots and over time build their own homes by hand, crowded in together.

And, for those who can’t afford to buy a plot of land, there are the favellas, essentially settlements of squatters who take over vacant land and build illegal homes from whatever materials they can find build. Favellas have been graphically depicted in City of God, a recent movie about a favella in Rio de Janeiro. They often lie right alongside upscale single-family homes or neighborhoods of high-rise condominiums. Electricity finds its way into the favellas—generally stolen off the utility lines, and it is common to see satellite dishes dotted around favellas. In Sao Paulo, favellas lie mostly on the urban edge, and are crowded, violent and infested with crime and drugs. Police enter them with trepidation; as a result, a local drug lord generally runs them.

How many people live in the favellas of Sao Paulo is unclear, but the number may be as much as 20% or more of the population, some three to four million people. Despite the violence, crime and disease favellas support, the government has not torn them down, as it has no alternative place for the families to live. There is virtually no government-built housing, and such government support as there is for housing is mostly in the form of special low-cost mortgage financing for homes for modest income families.

The most striking differences between Sao Paulo and U.S. cities are not the density, crisp urban edges or traffic. They are the cash-based housing finance system, and, related to that, the favellas. The worst U.S. urban areas, desperate and devastated as they are, would qualify as middle class neighborhoods in Sao Paulo. It is unlikely that we will ever see squatter cities in the U.S. of such size, despite the fact that the affordability of housing is declining in our fastest-growing cities. This can’t be said of other cities around the world, especially in developing countries. The growth of illegal housing—an inevitable response to low wages and expensive housing—is one of the biggest challenges facing most emerging megacities outside the United States.

What can be done to avoid or reduce the size of illegal communities? Build housing that is affordable, of course, but most governments in developing countries have limited funds for construction. Perhaps the single most important thing governments can do is to stabilize the economy, reducing interest rates and inflation, and then enable the creation of a strong primary and secondary mortgage market. Combine this with the prescriptions of Hernando de Soto, the Peruvian economist, who advocates legal recognition of ownership of homes in squatter communities (as was done in the U.S. under the 19th Century homestead acts), dramatically reduced red tape, and an honest bureaucracy, (each a major challenge), and the economic power of the private residential market can make a powerful difference in who can afford homes. It will also mean a quantum leap in the size of the market the private homebuilding sector can serve. Would it eliminate the need for favellas? Certainly not in the short run, and perhaps not in the long run either. But the larger the percentage of families who can own homes, borrow against them, and turn their equity into capital, the more rapidly a country’s economy can develop—that at least is one of the lessons of our history in the United States since the 1950s.

São Paulo's is among the younger metros in the world and it's considered one of the most modern although today's extension does not cover all areas of this populous city. The metro network (Lines 1-3, 49 km) is complemented by a 270 km suburban network operated by CPTM (Lines A-F). The metro runs underground through the city centre but on elevated structures or at grade in outer areas. To reduce the cost of new construction the decision was taken to upgrade some suburban lines to metro standard to provide more frequent service. This was already finished along Line E > 6, which serves the eastern neighbourhoods of the city and operates like an express metro parallel to Line 3, and on Line C > 7, although both lines are still operated by CPTM.