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Access to markets and the benefits of rural roads

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  • Jacoby, Hanan G.

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 magic bullet for poverty alleviation. The benefits are neither large enough nor targetedwell enough to reduce income inequality appreciably.

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Bibliographic Info

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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  1. 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.
  2. 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.
  3. Antonio Estache, 1994. "World Development Report: Infrastructure for Development," ULB Institutional Repository 2013/44144, ULB -- Universite Libre de Bruxelles.
  4. Steven Were Omamo, 1998. "Transport Costs and Smallholder Cropping Choices: An Application to Siaya District, Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 116-123.
  5. Timothy J. Bartik & V. Kerry Smith, 1996. "Urban Amenities and Public Policy," Book chapters authored by Upjohn Institute researchers, in: V. Kerry Smith (ed.), Estimating Economic Values for Nature: Methods for Non-Market Valuation, pages 271-318 W.E. Upjohn Institute for Employment Research.
  6. Chalamwong, Yongyuth & Feder, Gershon, 1988. "The Impact of Landownership Security: Theory and Evidence from Thailand," World Bank Economic Review, World Bank Group, vol. 2(2), pages 187-204, May.
  7. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-54, July.
  8. 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.
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