Publication: On Measuring the Benefits of Lower Transport Costs
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2008-01
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2012-05-25
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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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“Jacoby, Hanan G.; Minten, Bart. 2008. On Measuring the Benefits of Lower Transport Costs. Policy Research Working Paper; No. 4484. © World Bank. http://hdl.handle.net/10986/6489 License: CC BY 3.0 IGO.”
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