Access to Markets and the Benefits of Rural Roads

Roads play a central role in rural development, yet little is known about the size and distribution of benefits from such investments. This paper develops a method for estimating household-level benefits from road projects 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.