On Measuring the Benefits of Lower Transport Costs
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 m...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2008/01/8957085/measuring-benefits-lower-transport-costs http://hdl.handle.net/10986/6489 |
| Summary: | 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. |
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