How Land Pooling Ensured Planned Development in Bhutan’s Capital

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Residents in Thimphu contributed part of their land for urban infrastructure and services to support the growth of their city.


Thimphu, the capital of Bhutan and its largest city, draws thousands of migrants looking for better opportunities. The rapidly growing urban population and urban sprawl required proper planning for sustainable development.

While the need for urban planning was recognized by government over a decade ago, it used the principle of eminent domain in the past to acquire land needed for urban development. Land acquisition was resource-intensive and alienated displaced landowners who form part of the social fabric in developing urban areas.

Instead of eminent domain, land pooling was a pioneering solution that helped transform southern Thimphu into a well-planned urban area, serving as a model for urban infrastructure development for the whole country.

This case study is adapted from the project’s completion report.

Project Snapshot

  • 27 September 2006 : Project Approval
  • 31 December 2014 : Project Completion

  • $30.2 million : Total Project Cost
  • $24.6 million : ADB Loan
  • $23.8 million : Cost of Thimphu Urban Improvement

  • Financing :
  • Executing agency :
    • Department of Urban Development and Engineering Services (DUDES) under Bhutan’s Ministry of Human Works and Settlement
  • Implementing agency :
    • DUDES, Thimphu City Corporation (for Thimphu)

Bhutan has a rapidly growing urban population with more and more people from rural areas moving to cities and towns.

Thimphu faces the full force of this migration. Its population in 2017 was estimated at 114,551 or 15.6% of the country, making it the densest area with 4,389 persons per square kilometer. The city serves as the government’s administrative center with nearly half of its population relying directly or indirectly on public wages.

In 2006, the government asked for assistance from the Asian Development Bank (ADB) in improving urban infrastructure and services in Thimphu, the city of Phuentsholing, and Dagana, one of the regional centers. At that time, around 80% of Thimphu residents had access to water supply, but coverage was much lower as one moved away from the core area. The centralized wastewater collection and treatment system built in the mid-1990s covered only 30% to 40% of the core area. Solid waste was regularly collected from this area and taken to a waste site, which was nearing capacity and was not well-managed. Further, housing supply in the core area can no longer be expanded.

The city needed to build roads for new urban settlements that were planned to be part of the extended city area, and improve planning and coordination among agencies in developing and maintaining basic services, such as water, power, communications, and waste management. However, the government did not have access to land for urban development, especially with land values increasing in and around Thimphu.


The Thimphu Structural Plan of 2001 identified how much land was needed to accommodate the estimated population and economic growth, including outlying areas. It recommended incorporating 10 neighboring areas around the Thimphu core area under the management of the Thimphu City Corporation (now Thimphu Thromde).

During the start of the ADB project, the government was in the process of proposing the Bhutan Urban Development Act, which covers issues dealing with planned development and management of urban land, land and property ownership, land acquisition, compensation for land and other assets at reasonable market rates, land disposal, modes of developing land (including land pooling), and other provisions required for planning, allocating, and managing urban development. The proposed act also provides simpler and more efficient procedures for registering land transfers and a grievance redress system.


Bhutan is taking an inclusive and sustainable path to growth. It wants to “ensure that the benefits of development are shared equitably between different income groups and regions and in ways that promote social harmony, stability, and unity and contribute to the development of a just and compassionate society.”

In Thimphu, ADB’s 2006 project covered the southern part of the city, specifically four local area plans, and involved improving water supply, sanitation, solid waste management, roads, and other urban infrastructure.

Land pooling was a key component of the project in Thimphu. Also known as land readjustment, it is a technique used to redefine land ownership in a way that creates a new configuration of plots that is more suitable for urban structures and uses. Landowners contribute a portion of their property, proportionate to their holdings, to pool enough land for the development of roads and other public infrastructure and for social facilities and open space.

In the project areas, land parcels were irregularly shaped and landlocked, which left limited options for urban planning and development. Land pooling provided a solution to this problem.

The project applied land pooling and stressed the importance of public awareness and consultation to secure ownership of the project by government and landowners.

The Thimphu component involved constructing an intake and water treatment plant, installing water supply mains and an associated distribution network, improving waste management, and upgrading infrastructure (roads, drainage, water and wastewater networks, power and communication ducting) in land-pooled areas.

Implementation in Thimphu was initially delayed, partly because not all landowners readily volunteered to contribute a portion of their land. It was the city’s first time to try the land pooling scheme. The problem was resolved by starting with the development of an area in Lungtenphu, Thimphu where all landowners had already agreed. This served as the pilot area to demonstrate the benefits of land pooling. The demonstration effect was crucial in getting the remaining landowners to agree, as it built trust in the land pooling process.


The project pioneered land pooling in Bhutan at an unprecedented scale. It was implemented at a time when land pooling still had no legal standing. Project results showed that it was the right solution. Southern Thimphu was transformed into a well-planned urban area.

Without land pooling, none of the urban infrastructure would have been developed. New facilities include 24-hour piped water service, which will allow more than 12,800 households to connect to the water supply, and 28.5 kilometers of sewerage networks. They will soon be connected to a wastewater treatment plant financed by a follow-on ADB project. The project also built roads and provided power supply and communication ducting.

Land pooling and the resulting improvement in urban infrastructure and services, better urban environment through drainage and slope stabilization, and provision of common spaces raised land values. There were only a few permanent structures before the project. By 2017 there were 532 housing structures where nearly 19,000 people live. The project provided a substantial and much needed increase in housing supply at higher density. Business activities also increased in these areas.

The government used this pilot as the model for urban infrastructure development. Bhutan’s National Urbanization Strategy 2008 cited ADB’s land pooling as an appropriate approach for urban development. It is equitable, participatory, and more favored by landowners. It does not displace existing developed properties and automatically resolves legal and social disputes. The urbanization strategy also cited Thimphu City Corporation’s experience in land pooling as pioneering and a basis for indigenous adaptation of the method in other towns.  

While not the design focus, the project preserved heritage structures. For example, land pooling in Babesa, Thimphu was innovative in conserving old farmhouses, one of which was adaptively reused and is now the Babesa Village Restaurant. Adaptive reuse is a strategy to conserve private structures of historic or cultural heritage value.  

Bhutan’s Vision 2020 recognizes that it needs to preserve culture and heritage to maintain national identity and shield society from adverse impacts of modernization. Land pooling has helped keep communities together and preserve cultural heritage. In this respect, the project is ahead of its time. The government later drafted a Heritage Sites bill to protect cultural traditions and monuments, such as old farmhouses.

The project was a catalyst for future land pooling in Bhutan. It is now applied to all 10 areas of Thimphu and is envisioned for practically all local area plans in the country. The Land Pooling Rules 2009 ensures that the benefits of urban development are equally shared. It has made landowners important stakeholders in the urban development process.


Land pooling proved to be a highly effective process for urban development. It has changed how urban areas are developed in the country.

The key delay at project startup was corrected by first working in an area where 100% of landowners agreed to land pooling. Future projects where land pooling will be introduced can benefit from first working on a demonstration area to ensure buy-in and ownership of landowners and government.

The project resulted in significant multiplier effects that were either not expected or were not thought to be significant during project design. In Thimphu, land pooling allowed a development approach that minimized impacts on developed properties and influenced pioneering regulation to preserve built heritage.

The land pooling supported under the project is now being replicated in other parts of the country.

Ricardo Carlos Barba
Principal Safeguards Specialist, Office of Safeguards, Asian Development Bank

Ricardo Carlos Barba has worked for ADB since 1996, initially as a consultant and then as safeguards specialist. He has worked at the headquarters in Manila and the Cambodia Resident Mission. At present, he is in charge of safeguards implementation in South Asia and Southeast Asia for ADB’s Office of Safeguards. Ricky has also processed and implemented urban development and housing projects in Bhutan, India, Maldives, and Sri Lanka.

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