IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/4484.html
   My bibliography  Save this paper

On measuring the benefits of lower transport costs

Author

Listed:
  • Jacoby, Hanan G.
  • Minten, Bart

Abstract

Despite large amounts invested in rural roads in developing countries, little is known about their benefits. This paper derives an expression for the willingness-to-pay for a reduction in transport costs from the canonical agricultural household model and uses it to estimate the benefits of a hypothetical road project. Estimation is based on novel cross-sectional data collected in a small region of Madagascar with enormous, yet plausibly exogenous, variation in transport cost. A road that essentially eliminated transport costs in the study area would boost the incomes of the remotest households-those facing transport costs of about USD 75/ton-by nearly half, mostly by raising non-farm earnings. This benefit estimate is contrasted to one based on a hedonic approach.

Suggested Citation

  • Jacoby, Hanan G. & Minten, Bart, 2008. "On measuring the benefits of lower transport costs," Policy Research Working Paper Series 4484, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4484
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2008/01/22/000158349_20080122155649/Rendered/PDF/wps4484.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Arnott, Richard J & Stiglitz, Joseph E, 1981. "Aggregate Land Rents and Aggregate Transport Costs," Economic Journal, Royal Economic Society, vol. 91(362), pages 331-347, June.
    2. 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 1113-1137, October.
    3. Marcel Fafchamps & Ruth Vargas Hill, 2005. "Selling at the Farmgate or Traveling to Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 717-734.
    4. Scotchmer, Suzanne, 1986. "The short-run and long-run benefits of environmental improvement," Journal of Public Economics, Elsevier, vol. 30(1), pages 61-81, June.
    5. Shahidur R. Khandker & Zaid Bakht & Gayatri B. Koolwal, 2009. "The Poverty Impact of Rural Roads: Evidence from Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 57(4), pages 685-722, July.
    6. Mu, Ren & van de Walle, Dominique, 2007. "Rural roads and poor area development in Vietnam," Policy Research Working Paper Series 4340, The World Bank.
    7. Marcel Fafchamps & Forhad Shilpi, 2003. "The spatial division of labour in Nepal," Journal of Development Studies, Taylor & Francis Journals, vol. 39(6), pages 23-66.
    8. 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.
    9. Jerry Lebo & Dieter Schelling, 2001. "Design and Appraisal of Rural Transport Infrastructure : Ensuring Basic Access for Rural Communities," World Bank Publications, The World Bank, number 13911, July.
    10. Marcel Fafchamps & Forhad Shilpi, 2005. "Cities and Specialisation: Evidence from South Asia," Economic Journal, Royal Economic Society, vol. 115(503), pages 477-504, April.
    11. Jacoby, Hanan C, 2000. "Access to Markets and the Benefits of Rural Roads," Economic Journal, Royal Economic Society, vol. 110(465), pages 713-737, July.
    12. Mitchell Polinsky, A. & Shavell, Steven, 1976. "Amenities and property values in a model of an urban area," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 119-129.
    13. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    14. Gibson, John & Rozelle, Scott, 2003. "Poverty and Access to Roads in Papua New Guinea," Economic Development and Cultural Change, University of Chicago Press, vol. 52(1), pages 159-185, October.
    15. Hausman, Jerry A, 1981. "Exact Consumer's Surplus and Deadweight Loss," American Economic Review, American Economic Association, vol. 71(4), pages 662-676, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Transport Economics Policy&Planning; Rural Roads&Transport; Economic Theory&Research; Rural Transport;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:4484. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi). General contact details of provider: http://edirc.repec.org/data/dvewbus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.