Discover Mathura And Vrindavan A Spritual Journey.pdf
Infrastructure Agriculutre And Welfare In Rural Ethiopia
1. Infrastructure, Agriculture
and Welfare in Rural Ethiopia
David Stifel
Lafayette College
IFPRI Addis Ababa
Symposium on Ultra-Poverty
Institute for International Economic Policy
Washington, DC, 22 March 2012
1
2. The Question:
What are the benefits
of rural roads?
Punchlines:
3.Wholesale marketing
margins are falling
along with transport
costs.
4.Annual benefits in
our study area are
approx 1/3 of the cost
of constructing a feeder
road.
4. I. Trunk Roads
• Our analysis focuses on trade of cereals between
wholesale markets
• Monthly data from 31 wholesale markets across
Ethiopia over the last decade
• Complemented with a survey of traders, brokers and
truck drivers in these 31 markets (or surroundings) in
January 2012
• Why???
Margins are falling Affect both urban & rural poor
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11. 2. Rural Feeder Roads
1. The measure of benefits
• Willingness to pay – equivalent variation
2. Endogenous road placement
• Quasi-Experiment
12. How is it a quasi-experiment?
• Sample area selected purposefully
o Homogeneous region
o Except for transport costs
• Households’ circumstances differ because of
different transport costs...
• ...not because of land characteristics, etc.
13.
14. Transport Costs
• Donkey costs (Birr/kg)
o Cost of renting donkey
o Weight donkey can carry
• Economic transport costs
o Include the opportunity cost
of time
15. Average Travel Times and
Transport Costs to the Market Town
Travel Time Transport Cost
(hours) (Birr/Quintal)
Transport Cost Quintile
Least Remote 1.5 18.2
Quintile 2 3.6 40.2
Quintile 3 5.2 52.5
Quintile 4 6.0 60.4
Most Remote 6.5 73.4
Total 4.5 48.4
16. Is land equally productive
in the sample area?
• What crops?
o Sorghum
o Millet
o Maize
o Black/mixed teff
• Confounding factors?
o Weather and pest shocks
o Inputs – labor, fertilizer, herbicides, Improved seeds
17. Modern Input Use
Percent of households using…
Chemical Fertilizer Improved Seeds
Any Dap Urea (maize only)
Transport Cost Quintile
Least Remote 94.2 94.2 83.0 75.6
Quintile 2 86.2 86.2 61.4 31.2
Quintile 3 79.9 78.5 46.5 15.0
Quintile 4 73.2 73.5 49.3 12.4
Most Remote 71.1 71.7 37.5 9.4
Total 81.2 81.1 56.3 33.3
19. 2. Measuring Benefits
• Households’ willingness-to-pay for
reduced transport costs (Jacoby and Minten, 2009)
Compensate a remote household just enough
such that indifferent between…
o Remote (τ = τ0)
o Situation in market town (τ = 0)
Estimate this compensation
Equivalent variation
20. Demand for Transport Tonnage
1250
1000
750
kg
500
250
0
0 20 40 60 80 100
Transport Cost (Birr/kg)
Total Freight Imported Consumption
Agricultural Surplus Input Purchases
21. Benefits Estimate
• Most remote households as accessible as the
least remote
• ↓ transport costs by US$ 50 / ton
• Benefit ≈ 3,300 Birr per year (US$ 194)
o This is 60.5% of mean consumption (most remote)
22. Benefit Estimates
For households in
each of the following Benefit as percent of
evenly spaced gridpoints household consumption
2nd 2.0
3rd 5.4
4th 6.5
5th 6.7
6th 7.4
7th 17.2
8th 23.5
9th 53.0
Most remote 60.5
Average for all households 9.3
* Adjusted for landholdings
Remote HH will benefit the most.
23. Consumption & Remoteness
6000 4000
Birr per person
2000 0
0 20 40 60 80 100
Transport Costs (Birr/quintal)
Total Food
Non-Food
24. Benefits vs. Costs
• Cost ≈ 28 million Birr (US$ 1.60 million)
800,000 Birr / km of gravel road
35 km
• Benefits ≈ 10 million Birr per year (US$ 0.58 million)
1,930 Birr benefit on average
5,180 households in survey area
Three years for accrued benefits to exceed cost
25. Concluding Remarks
• Benefits of rural roads in Ethiopia
– Highlight the effects on the poor
• Trunk roads
– Lower transport costs & marketing margins
– Urban poor in deficit areas
– Rural producers in surplus areas
• Feeder roads
– Payoffs are high (provided the roads last)
– Benefits disproportionately benefit remote households
– Remote households are poorer
