Eliminating Uncertainty in Market Access: The Impact of New Bridges in Rural Nicaragua

Kevin Donovan and Wyatt Brooks ()
Additional contact information
Kevin Donovan: University of Notre Dame

No 1607, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: We estimate the impact of new bridges in rural Nicaraguan villages facing seasonal floods that unpredictably eliminate access to outside markets. We collect detailed annual household surveys over three years and conduct weekly telephone followups with a subset of households for sixty-four weeks, both before and after construction. This information is collected in villages where bridges are built, and in comparable villages where no bridge was built for only engineering-related reasons. We find that bridges eliminate uncertainty in market access driven by floods: in absence of a bridge, household income falls significantly during floods. Bridges completely eliminate this effect. Compared to households in villages where no bridges are built, bridges cause substantial reallocation of activities between farming and wage work. There are also significant effects on agricultural choices: increased fertilizer spending, increased yields on farms, and lower crop storage. We develop a model of occupational choice and risky farm investment, and show that these results are a rational response to reduced market income risk from the bridges. We provide evidence that these results are not due to lower trade costs outside of flooding periods, nor due to looser collateral constraints.

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2017/paper_1607.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:1607

Access Statistics for this paper

More papers in 2017 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().