Roads and Climate Resilience in Informal Food Industries: Evidence from India

While road infrastructure is widely recognized as a driver of economic development, can it also aid in disaster resilience? This paper investigates whether India’s national highway corridors—the Golden Quadrilateral and the North-South and East-West—can buffer production losses from extreme floods in informal manufacturing. Motivated by a structural model of disaster resilience at the plant level, the study examines the effects of dual and staggered treatments: floods and roads. It combines geospatially matched, staggered flood exposure data from the Dartmouth Flood Observatory with phased highway rollout timelines from the National Highways Authority of India and repeated cross-section survey data (1990–2016) on Indian informal manufacturing. Exploiting quasi-random variation in the timing of flood exposure and road construction, the study implements a stacked difference-in-differences design, matching treated districts to future treated counterparts. Results show that floods significantly reduce both gross output and value added, while highway access counteracts those losses. Plants located directly on completed highway segments nearly neutralize the average 7 percent flood-related output loss, benefiting from both higher output and lower input expenditures—labor, materials, and energy. These effects are magnified for plants that own transport equipment, highlighting a complementarity between internal logistics and external infrastructure. Off-highway plants exhibit similar resilience only when they possess transport assets, enabling access to distant road networks. Overall, the findings reveal that roads are not only engines of development but also critical enablers of resilience. Designing infrastructure with this dual function—development and resilience—is essential for building a climate-smart and resilient informal production economy.