On measuring the benefits of lower transport costs

Hanan Jacoby and Bart Minten ()

No 4484, Policy Research Working Paper Series from The World Bank

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.

Keywords: Transport Economics Policy&Planning; Rural Roads&Transport; Economic Theory&Research; Rural Transport (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-ure
Date: 2008-01-01
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Journal Article: On measuring the benefits of lower transport costs (2009)
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