The benefits of rural roads: enhancing income opportunities for the rural poor

This paper examines the impacts of rehabilitating rural roads on key welfare indicators such as income and consumption. It aims to complement previous studies which have concentrated mainly on reductions in monetary or time costs needed to access product and factor markets or key public social services. Focussing on rural households in poor districts of Peru, it uses a statistical technique (propensity score matching) to compare those located near rehabilitated roads to those located elsewhere.It finds that: access to a rehabilitated road is linked to changes in income sources: non-agricultural income opportunities are enhanced, especially from wage-employment road access is also associated with an increase in overall income, especially in those areas linked to markets by motorised roads (as opposed to low-quality tracks, trails and footpaths which are not suitable for trucks or public transport) the difference between the income effects of rehabilitating motorised, versus non-motorised roads, may be explained by complementarities between road rehabilitation and the greater asset endowments of households located near motorised roads: on average these households had higher education, larger farmland size, and greater access to public infrastructure than those located near non-motorised roads the increased income is not matched by an equivalent consumption increase, apparently because the additional income is used to invest in livestock the reason that households use the increased income to save (by investing in livestock) rather than for consumption may be that they perceive the road quality improvement as transitory.Considering areas for future research, the paper notes that data limitations prevented it from carrying out a comparative analysis of the benefits obtained by households living near motorised and non-motorised rehabilitated roads, and suggests that this is a crucial research area for the design of future road improvement programmes. Since this study only had access to household-level data, the paper also suggests that research is needed on the impact of roads on job opportunities at the level of the individual household member.The paper concludes that these results present clear evidence of the strong impact that rural road improvement has on the beneficiary population. It also emphasises the importance of ensuring that road rehabilitation is not transitory; long-term maintenance of the roads should be guaranteed, in order to allow rural households to make long-term decisions about investment and consumption that would maximise the positive impact of the improvements.