On Measuring The Benefits Of Lower Transport Costs

Download or read book on measuring the benefits of lower transport costs written by Hanan G. Jacoby and published by World Bank Publications. This book was released on 2008 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.