Jacoby, Hanan G.Minten, Bart2012-03-302012-03-302009Journal of Development Economics03043878https://hdl.handle.net/10986/5878Despite 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.ENMicroeconomic Analyses of Economic Development O120Economic Development: AgricultureNatural ResourcesEnergyEnvironmentOther Primary Products O130Economic Development: Regional, Urban, and Rural AnalysesTransportation O180Transportation Systems: Government and Private Investment AnalysisRoad Maintenance, Transportation Planning R420Journal ArticleWorld Bank