Cities Within Cities: How Informal Settlements Actually Work

Around 1.1 billion people live in informal settlements, yet their systems remain invisible to urban planning. Far from deficient, these neighbourhoods operate as complex resource networks. The challenge is no longer understanding them – but planning with them.

Around 1.1 billion people – roughly one in seven humans alive today – live in informal settlements. At dawn, in neighbourhoods often missing from official maps, millions of households begin a daily choreography of survival: water is collected, food is sourced, fuel is rationed, waste is repurposed. A constant negotiation and adaptation. These communities actively build, govern, and sustain themselves largely outside formal planning systems, managing daily flows of water, food, energy, and waste through adaptive, largely invisible networks.

Figure 1. Spatial context and examples of informal settlements in Metropolitan Lima Map of Peru showing the location of Metropolitan Lima and examples of informal settlements (Casuarinas de Carabayllo, Nuevo Horizonte, Ciudad de Gosen, and Puyusca). These cases illustrate the spatial distribution and topographic conditions of informal urbanization across the metropolitan area. Source: Acevedo De‑los‑Ríos et al. (2024)”

Far from being passive recipients of urban services, they function as metabolically active systems – systems whose resource logic formal planning has consistently failed to measure, understand, or support.

A more productive approach begins by shifting the central question: not what these communities lack, but how they function, and what planning must do to align with, rather than override, the resource intelligence already embedded within them.

Informal Settlements as Resource Systems

The concept of urban metabolism – treating cities as systems that consume, transform, and discharge materials and energy – was formalised in the 1960s and has since become a cornerstone of urban environmental analysis. Yet for decades, informal settlements remained largely absent from this framework, treated as data voids: too complex to quantify and too marginal to matter in city-wide accounting. This absence matters. It has shaped how cities are planned – and who is considered within those plans.

A review of 178 publications over two decades found that Latin America, home to a significant share of the world’s informal settlement population, was severely underrepresented in the urban metabolism literature. The consequences extend beyond academia. Without understanding how a settlement uses water, manages waste, burns fuel, or sources food, planners cannot design interventions that work with existing systems rather than against them.

When analysed metabolically, informal settlements reveal dense, adaptive networks of resource flows – networks that conventional planning instruments were never designed to detect, let alone support.

From Evidence to Practice

Evidence at the neighbourhood scale reveals not only what informal settlements lack, but how they function – and crucially, how planning must change.

Rather than treating metabolic data as a static diagnostic, as a snapshot of deficiency, three structural shifts are required to translate this evidence into effective urban practice.

Each shift is grounded in empirical fieldwork from Lima, Peru, where informal settlements cover 54% of the metropolitan area.

Seeing What Was Previously Invisible: Multi-Flow Data

First, cities need neighbourhood-scale, multi-flow resource data. A metabolic study of 249 households in Lima produced a comprehensive inventory integrating flows of water, energy, food, and waste. This granular data exposed structural vulnerabilities invisible to city-level aggregates:

• zero local food production;
• a daily vegetable intake of 144 grams per person – 28% below the WHO minimum of 200 grams;
• and the lowest income tertile spending over 70% of their monthly expenditure on food.

Water supply, though nominally connected to the municipal network, was intermittent and costly, with household water expenditure exceeding the UN affordability threshold of 3% of income. Cooking fuel – almost exclusively liquefied petroleum gas – accounted for 70% of total household energy consumption. Monthly solid waste reached 18.6 tonnes, of which 12% was organic material sent entirely to landfill. Seen in isolation, each figure signals a problem. Seen together, they reveal a system. These flows are not independent. Organic waste that overwhelms disposal systems is also potential compost; greywater that strains drainage infrastructure could support local food production. Even relatively small surveys – 200 to 300 households – can reveal this resource architecture, but only when guided by a multi-flow analytical framework capable of capturing interdependencies.

Figure 2. Urban metabolism of an informal settlement: socio-ecological flows and resource interactions Schematic representation of resource flows within an informal settlement using the MuSIASEM approach, integrating human activity, land use, and flows of water, energy, food, and waste across household, sectoral, and urban scales. The diagram highlights the interdependencies between socio-economic activities and ecological processes. Source: Acevedo De‑los‑Ríos et al. (2024)”

The Systemic Operative Framework – a 12-dimensional, 83-variable network mapping 3,697 evidence-based relationships – offers a replicable methodology for cities across the Global South. The level of detail also exposes dimensions often overlooked, particularly gender: women performed 71% of unpaid care work, averaging 44 hours per week, while earning 54% less than men in formal employment. Any resource-intensive intervention – urban agriculture, waste sorting, or water management – that ignores this constraint risks overestimating participation and underestimating implementation barriers.

Expanding What Counts

Second, housing upgrade standards must expand beyond construction materials to account for full resource flows.

In informal settlements, cooking fuel, water sourcing, and organic waste management often carry environmental impacts that exceed those of building materials themselves. Upgrades that reduce LPG dependence, integrate composting systems, or enable greywater reuse generate co-benefits in carbon reduction and resource circularity – benefits that material-focused standards fail to capture.

Without incorporating these flows, upgrading efforts will continue to prioritise what is most visible,  while overlooking what is most impactful.

Governance As Infrastructure

Third, governance must be understood not as context, but as a resource. When metabolic data is combined with system dynamics modelling, feedback loops across 82 variables become visible and testable across multiple scenarios. Under the most integrated circular scenario:

• the Food Security Score increased from 2.8 to 3.3 within five years;
• the proportion of households meeting the WHO vegetable intake target rose by 38 percentage points.

Integrated interventions achieved these outcomes 47.5% faster than isolated, single-flow approaches – demonstrating that connections between systems matter as much as any individual interventions.

Network analysis across all system variables identified community organisation as the highest-leverage factor for sustained improvement, outperforming any single infrastructure investment. Accordingly, care infrastructure that reduces women’s time burden is not supplementary, but foundational for meaningful and sustained participation in resource management systems.

From Technical Tools to Political Commitment

One billion people live in informal settlements. They are not outside the urban resource system, but an active, adaptive part of it. The flows observed in Lima – food, water, energy, waste, and labour – are not exceptional; they reflect the everyday realities of informal settlements across the Global South. The analytical tools to understand and support these flows now exist, including urban metabolism analysis, system dynamics modelling, circular economy design, and multi-flow spatial planning. The challenge is no longer whether we can understand these systems – but whether we are willing to act on that understanding. What remains is not a technical gap but an institutional one:

• to integrate neighbourhood-scale resource data into urban planning instruments;
• to reform housing upgrade standards around full-spectrum resource performance;
• and to recognise community governance as foundational infrastructure.

The evidence is clear: interventions targeting single resource streams consistently underperform integrated approaches by nearly half. Planning with informal settlements, rather than around them, is therefore not a marginal concern. It is a prerequisite for any urban sustainability agenda that takes seriously the lived realities – and resource systems – of millions and millions of people.

Acevedo De‑los‑Ríos, A., Chumpitaz‑Requena, F. R., & Rondinel‑Oviedo, D. R. (2024). Analysis of urban metabolism in an informal settlement using the MuSIASEM method  in Lima. Cleaner Environmental Systems, 13, 100189. https://doi.org/10.1016/j.cesys.2024.100189