Jacoby, Hanan G.Minten, Bart2012-05-252012-05-252008-01https://hdl.handle.net/10986/6489Despite 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.CC BY 3.0 IGOACCESS TO CREDITACCESSIBILITYACCOUNTINGAGRICULTURAL OUTPUTANNUAL INCOMEAVERAGE BENEFITAVERAGE BENEFITSBASIC ACCESSBENEFIT FORMULABETTER ROADBRIDGESCALCULATIONCALCULATIONSCARRIERSCOMMODITIESCOMMODITYCONSTANT RETURNS TO SCALECONSUMERCONSUMER SURPLUSCONTRIBUTIONCOST FUNCTIONSCOST OF TRAVELCROSSINGDEBTDEMAND CURVEDEMAND ELASTICITIESDEMAND FOR TRANSPORTDISCOUNT RATEDROUGHTEARNINGSECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC FRAMEWORKECONOMICS LITERATUREEQUILIBRIUMETHNIC GROUPEXPORTSEXTENSION SERVICESEXTERNALITIESFARM INCOMEFINANCIAL SERVICESFREIGHTHIGH TRANSPORTHIGHWAYHOUSEHOLD INCOMEIMPACT OF TRANSPORTINCOMEINCOME EFFECTINCOMESINCREASING RETURNSINFRASTRUCTURE INVESTMENTINHERITANCEJOURNEYJOURNEYSLABOR MARKETMARGINAL COSTMARKETINGMEDICAL CAREOPPORTUNITY COSTOX-CARTPAVED ROADSPOLITICAL ECONOMYPOPULATION DENSITYPRESENT VALUEPROBABILITYPRODUCTION FUNCTIONPRODUCTION FUNCTIONSPRODUCTIVITYPROPERTY VALUESPUBLIC ECONOMICSPUBLIC INVESTMENTSPURCHASESQUESTIONNAIRERECONSTRUCTIONREGRESSION ANALYSISRENT PAYMENTSRENTSROADROAD ACCESSROAD BUILDINGROAD CONSTRUCTIONROAD IMPROVEMENTROAD IMPROVEMENTSROAD NETWORKROAD PROJECTSROAD TRANSPORTROAD USERROAD USER CHARGESROUTEROUTESRURAL INFRASTRUCTURERURAL ROADRURAL ROAD CONSTRUCTIONRURAL ROAD IMPROVEMENTSRURAL ROAD PROJECTRURAL ROAD PROJECTSRURAL ROAD REHABILITATIONRURAL ROADSRURAL TRANSPORTRURAL TRANSPORT INFRASTRUCTURESALARIESSALESALESSAVINGSSECONDARY SCHOOLSOCIAL SERVICESSTEEP TERRAINSTOCKSSUB-SAHARAN AFRICATAXATIONTOTAL COSTSTOTAL OUTPUTTRANSPORTTRANSPORT COSTTRANSPORT COSTSTRANSPORT DEMANDTRANSPORT INFRASTRUCTURETRANSPORT PROJECTSTRANSPORT SECTORTRANSPORT SERVICESTRANSPORTATIONTRAVEL TIMETRUCK TRANSPORTTRUEUNEMPLOYMENTUTILITY FUNCTIONVALUABLEWAGEWAGESWELFARE BENEFITSWORTHWorld Bank10.1596/1813-9450-4484