On measuring the benefits of lower transport costs

Hanan Jacoby and Bart Minten ()

Journal of Development Economics, 2009, vol. 89, issue 1, pages 28-38

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 $75/ton - by nearly half, mostly by raising non-farm earnings. This benefit estimate is contrasted to one based on a hedonic approach.

Keywords: Transport; costs; Welfare; measurement; Rural; infrastructure; Agricultural; household; models (search for similar items in EconPapers)
Date: 2009

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Working Paper: On measuring the benefits of lower transport costs (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:eee:deveco:v:89:y:2009:i:1:p:28-38

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