Too many governance projects have a hidden vulnerability: the people who make the most consequential early decisions hold no equity stake in what they are building.
Contractors collect fees and move on. Communities accept a one-time payment and disengage. Then something fails, and no one responsible is still in the room.
A cautionary tale from the Adriatic
The Durrës Marina, a multi-billion-euro development on the Albanian Adriatic coast, is a case in point. In the spring of 2026, Albania’s Institute for Construction and Territorial Monitoring confirmed that two of its residential buildings had sunk: one by 28 centimeters, another by 18.1 Investigators pointed to a decision not to install pile foundations in the sandy, swamp-like terrain beneath the site.2 The developers dispute that this was the issue.
Photograph of Durrës Marina, taken by the author
Nonetheless, this problem may have come about because the people who would actually live in those buildings, who may have had the local knowledge needed to prevent this problem, had little say in how they were built. Many had bought their apartments at auction in December 2022, before construction permits had even been approved, and after that had limited further input.
The model next door
A contrasting practice can be found across much of the same country. In Albania’s informal construction market, developers frequently compensate landowners and contractors not in cash but in completed units.3 The plot owner takes a share of the finished building’s floor space. The concrete supplier, the electrician, and the plumber may each accept units rather than fees. The developer preserves liquidity. The contractor becomes a stakeholder in what they are building.
This practice ensures incentives are aligned. Every party holding equity wants the building to be sound, because they will own part of it. Subcontractors police quality themselves. No external monitor is needed. Equity holders also bring something outside contractors typically lack: local knowledge. In the Durrës Marina case, someone with a genuine long-term stake in that stretch of Adriatic coastline would likely have known the terrain and flagged the need for pile foundations before a single wall went up.
This is Nassim Nicholas Taleb’s principle of skin in the game: people who bear a share of the downside regulate their own behaviour in ways that oversight cannot manufacture.4 The contrast with the marina situation is noteworthy. Equity enforces what monitoring tries and fails to guarantee.
Payment versus participation
The same logic applies at the level of zones, and the evidence is substantial.
Farole and Akinci’s World Bank survey of Special Economic Zones across Africa, Asia, and Latin America found that zones offering genuine community benefit-sharing were substantially more likely to survive changes in national government.5
By contrast, zones that made one-time payments to adjacent communities and moved on displayed a recurring pattern: when new concessions were later sought, those same communities often became a source of organised opposition.
UNCTAD’s analysis of more than 5,400 SEZs reinforces this finding. Community benefit-sharing proved a stronger predictor of zone longevity than either infrastructure quality or the generosity of tax incentives.6 The reason is intuitive. A payment concludes a transaction. Equity creates an ongoing relationship.
Another instructive case study can be found in South China.
In 1980s Shenzhen, farming villages incorporated into the Special Economic Zone received equity stakes in development companies rather than simple cash compensation.7 By the 1990s, these communities were collecting rents from factories and apartment developments built on their former agricultural land. As a result, the community resistance that delayed or derailed comparable projects elsewhere in China was largely absent.
The Shenzhen skyline with Pingan International Financial Center at the center
There are also early signs that the equity model is bringing benefits in Próspera, Honduras. Local landowners on Roatán were incorporated as equity participants from the outset.8 When the Honduran government moved to repeal the ZEDE framework in 2022, these landowners were among the most vocal defenders of the project. Their stake had given them a reason to fight for it.
Duna Tower, the flagship building in Prospera’s Beta District
For Free City practitioners, the implication is straightforward. Governments that can react cautiously to proposals that emphasize legal autonomy often respond more favourably when the same proposal is presented as a long-term economic partnership in which local stakeholders share directly in the upside.9 Structured participation creates aligned incentives and durable coalitions. Transactional compensation may secure agreement today, but it rarely secures loyalty tomorrow.
Why it matters now
Global population is projected to rise from 8.3 bn today reach 9.7 bn by 2050, with most of that growth coming from the Global South.10 The United Nations estimates that two-thirds of humanity will live in urban areas by the same date.11 Most of the cities they will live in have not yet been built. The governance models that will shape them are still to be designed.
The Free Cities movement has produced genuinely innovative governance models, with different approaches to property ownership, revenue raising, and decision-making.12 It has the people and the momentum to influence that future.
The projects most likely to succeed, however, will not be those with the cleverest legal frameworks. They will be those that align the interests of everyone involved from the outset. History suggests that communities rarely defend a payment they received years ago. They do, however, defend an asset that continues to generate value.
The lesson is simple: don’t pay people to build your city. Give them a stake in it.
Albania’s IKMT confirmed subsidence of 28 cm and 18 cm in two residential buildings at the Durrës Marina following on-site inspections. See “Why did the first two buildings of the 2 billion euro project in Durrës ‘sink’?”, Vox News, 15 May 2026, at voxnews.al; and “Probe confirms subsidence of two buildings at billion-euro Durrës Marina project”, Reporter.al, 13 May 2026, at reporter.al.
Subcontractor testimony broadcast on Albanian investigative programme Piranjat alleged subsidence of up to 74 cm, attributing it to the absence of pile foundations in sandy, swamp-like terrain. See “Is the Durrës Marina sinking? Alalabari Palaces sink 74 cm”, Hashtag.al, 24 April 2026, at hashtag.al; and Pamfleti.net, 2026, at pamfleti.net. The project’s developers dispute these accounts. No finding of wrongdoing is made or implied.
On the construction-by-exchange model (“ndërtim me shkëmbim”) in Albanian urban development, see Pojani, D., “Urban Form and Social Context: Local Knowledge in Post-War Albania,” Journal of Urban Design, Vol. 15, No. 4 (2010), pp. 583–602.
Taleb, N.N., Skin in the Game: Hidden Asymmetries in Daily Life (New York: Random House, 2018). Taleb’s argument is that decision-makers who bear proportionate downside exposure self-regulate more reliably than those monitored from the outside.
Farole, T. and Akinci, G. (eds.), Special Economic Zones: Progress, Emerging Challenges, and Future Directions (Washington, D.C.: World Bank, 2011). The study covers SEZ performance across Africa, Asia, and Latin America, and identifies structured community benefit-sharing as among the strongest predictors of long-term zone continuity. It specifically notes the pattern by which one-time payments generate subsequent demands for further compensation.
UNCTAD, World Investment Report 2019: Special Economic Zones (Geneva: United Nations, 2019). Analysis of over 5,400 SEZs finds that host-state and community benefit-sharing predicts zone longevity more reliably than infrastructure quality or the scale of tax concessions.
On Shenzhen’s village shareholding cooperatives, see O’Donnell, M.A., Wong, W. and Bach, J. (eds.), Learning from Shenzhen (Chicago: University of Chicago Press, 2017), which documents the conversion of farming communities into landed urban shareholders through the equity structure.
On Próspera’s equity arrangements with Honduran landowners and the 2022 ZEDE repeal, see the Charter Cities Institute’s published analysis at chartercitiesinstitute.org.
Romer, P., “Technologies, Rules, and Progress: The Case for Charter Cities,” CGD Essay (Washington, D.C.: Center for Global Development, 2010). Romer argues that the binding constraint on development in many jurisdictions is not capital but the absence of workable rules, and that new cities on underperforming land offer the most tractable path to testing better ones.
United Nations, World Population Prospects 2022: Summary of Results (New York: United Nations, 2022). Sub-Saharan Africa alone is projected to account for more than half of global population growth to 2050.
United Nations, World Urbanization Prospects: The 2018 Revision (New York: United Nations, 2019). The report projects 68 per cent urban population globally by 2050, compared with approximately 55 per cent at the time of publication.
For example, Próspera, in Honduras, offers outright property ownership, low taxes, an annual governance fee, and a menu of regulatory frameworks residents can choose between. Ciudad Morzán, also in Honduras, takes the opposite approach: residents rent rather than own, with the community funded through those rents. CryptoCity combines outright property ownership with DAO governance of communal spending, giving members a direct vote on how public funds are allocated.
Julien Andrew STARR is the Founding Director of the Startup States Society, a Geneva-based think tank and public policy institute, startupstates.swiss, and on Substack at substack.com/@startupstates.
A well argued piece, Andy. Is there anything more you can share about what happened with Durrës Marina?
This makes a lot of sense. Is there some research that looked into where or how often this is usually done, beyond these anecdotal examples? Would be interesting to see some numbers behind it too.