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Access to markets and the benefits of rural roads

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Author Info
Jacoby, Hanan G.

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Abstract

Transport infrastructure plays a central role in rural development, yet little is known about the size - or, especially, the distribution - of benefits from road investments. Among other benefits, rural roads provide cheaper access to both markets for agricultural output and for modern inputs. The author develops and implements a method for nonparametrically estimating the benefits from road projects at the household level. The idea is that since these benefits get capitalized in land values, they can be estimated by examining how the value of farmland falls with distance from agricultural markets. Household-level benefits from hypothetical road projects are calculated from the predicted appreciation in value of the household's farmland. These predicted benefits are then related to household per-capita expenditures to assess their distributional consequences. The empirical analysis, using data from Nepal, shows large benefits from extending roads into remote rural areas, much of these gains going to poorer households. But rural road construction is not the magicbullet for poverty alleviation. The benefits are neither large enough nor targeted well enough to reduce income inequality appreciably.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2028.

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Date of creation: 31 Dec 1998
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Handle: RePEc:wbk:wbrwps:2028

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Keywords: Health Economics&Finance Environmental Economics&Policies Banks&Banking Reform Economic Theory&Research Labor Policies Economic Theory&Research Environmental Economics&Policies Health Economics&Finance Banks&Banking Reform Roads&Highways

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References listed on IDEAS
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  1. Colwell, Peter F. & Munneke, Henry J., 1997. "The Structure of Urban Land Prices," Journal of Urban Economics, Elsevier, vol. 41(3), pages 321-336, May. [Downloadable!] (restricted)
  2. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, vol. 84(4), pages 753-71, September. [Downloadable!] (restricted)
  3. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-54, July. [Downloadable!] (restricted)
  4. Bartik, Timothy J. & Smith, V. Kerry, 1987. "Urban amenities and public policy," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 31, pages 1207-1254 Elsevier. [Downloadable!] (restricted)
  5. Gersovitz, Mark, 1989. "Transportation, State Marketing, and the Taxation of the Agricultural Hinterland," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1113-37, October. [Downloadable!] (restricted)
  6. Chalamwong, Yongyuth & Feder, Gershon, 1988. "The Impact of Landownership Security: Theory and Evidence from Thailand," World Bank Economic Review, Oxford University Press, vol. 2(2), pages 187-204, May.
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  1. Emran, M. Shahe & Shilpi. Forhad, 2002. "Marketing externalities and market development," Policy Research Working Paper Series 2839, The World Bank. [Downloadable!]
  2. Fafchamps, Marcel & Shilpi, Forhad, 2006. "Isolation and Subjective Welfare," CEPR Discussion Papers 6001, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Randall Akee, 2006. "The Babeldaob Road: The Impact of Road Construction on Rural Labor Force Outcomes in the Republic of Palau," IZA Discussion Papers 2452, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Calderon, Cesar & Serven, Luis, 2004. "The effects of infrastructure development on growth and income distribution," Policy Research Working Paper Series 3400, The World Bank. [Downloadable!]
    Other versions:
  5. Khandker, Shahidur R. & Bakht, Zaid & Koolwal, Gayatri B., 2006. "The poverty impact of rural roads : evidence from Bangladesh," Policy Research Working Paper Series 3875, The World Bank. [Downloadable!]
  6. Umali-Deininger, Dina & Shilpi, Forhad, 2007. "Where to sell ? market facilitie s and agricultural marketing," Policy Research Working Paper Series 4455, The World Bank. [Downloadable!]
  7. Pham, Hung T, 2006. "Rural Nonfarm Employment Under Trade Reform Evidence From Vietnam, 1993-2002," MPRA Paper 6476, University Library of Munich, Germany. [Downloadable!]
  8. Minten, Bart & Jacoby, Hanan G., 2008. "On measuring the benefits of lower transport costs," Policy Research Working Paper Series 4484, The World Bank. [Downloadable!]
  9. Fan, Shenggen & Chan-Kang, Connie, 2004. "Road development, economic growth, and poverty reduction in China," DSGD discussion papers 12, International Food Policy Research Institute (IFPRI). [Downloadable!]
    Other versions:
  10. John Gibson & Scott Rozelle, 2002. "Poverty and Access to Infrastructure in Papua New Guinea," Department of Agricultural & Resource Economics, UC Davis, Working Paper Series 1000, Department of Agricultural & Resource Economics, UC Davis. [Downloadable!]
  11. Javier Escobal & Sonia Laszlo, 2005. "Measurement Error in Access to Markets," Development and Comp Systems 0503008, EconWPA. [Downloadable!]
    Other versions:
  12. Peter Warr, 2005. "Roads and Poverty in Rural Laos," Departmental Working Papers 2005-04, Australian National University, Economics RSPAS. [Downloadable!]
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