A Simple Way to Reduce Urban Poverty: Pave Streets

A defining characteristic of cities in the developing world is the lack of basic services. Only about a third of homes in these regions have piped water, and maybe three in five have electricity, according to a 2003 United Nations report. Even fewer have adequate sewage or treated waste. Transport infrastructure, particularly surfaced roads and street lighting, is lacking too.

That's the bad news. The good news is the simple act of providing some of these services may have a considerable impact on mitigating hardships in developing areas. 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. Pavement projects boosted housing wealth, which boosted credit use, which boosted household consumption — all for a relatively low cost.