Road, participation in markets, and benefits to agricultural households: Evidence from the topography-based highway network in Nepal
- Economic Development And Cultural Change
- 68(3), Apr, 2020: p.839-864
This paper identifies the role of roads in improving agricultural livelihoods and examines the key market mechanisms through which improved connectivity translates into economic gains for agricultural households. I use a rigorous identification strategy based on the rugged terrain that significantly influences the design and costs of constructing roads in Nepal, along with new geospatial data to find a positive impact of roads on farmland values. A 1% decrease in distance to a road raises the market price of an agricultural plot from 0.1% to 0.25%. This increase in land value is underpinned by increased participation by households in agricultural markets and improved farm production and incomes. The results also suggest that a decrease in the distance to a road contributes to the commercialization of agriculture and increases the use of fertilizer in agricultural production, thus reducing the unit cost of fertilizers. – Reproduced