Access to Markets and the Benefits of Rural Roads: A Nonparametric Approach

Transport infrastructure plays a central role in rural development, yet little is known about the size and especially the distribution of benefits from road investments. This paper develops and implements a method for nonparametrically estimating the benefits from road projects at the household level using the relationship between the value of farmland and its distance to agricultural markets. The empirical analysis, using data from Nepal, suggests that providing extensive road access to markets would confer substantial benefits on average, much of these going to poor households. However, the benefits would not be large enough or targeted efficiently enough to appreciably reduce income inequality in the population.