Road construction is thought to result in forest loss, but causal identification has been elusive. Using multiple causal identification strategies, the authors find that India's rural road construction program, which built new feeder roads to over 100,000 villages and 100 million people, had precisely zero effect on local deforestation. In contrast, when 10,000 kilometers of India's national highway network were upgraded, there was substantial forest cover loss, driven by increased timber demand along the highway corridor. In terms of forests, last mile connectivity had a negligible environmental cost, while expansion of major corridors had important environmental impacts.
This paper estimates the impacts of road improvements on local employment structure and specialization in Mexico over the 1985-2016 period. Using geo-referenced panel data, it measures access to domestic markets from each locality as a weighted sum of surrounding populations (market access) or incomes (market potential), with weights inversely related to travel time or travel cost. Instrumenting for road placement endogeneity and addressing the recursion problem in regressions that involve access to markets, the analysis finds significant and positive causal effects of improved accessibility on employment and specialization. Heterogeneous effects are found across sectors and regions.
When a policy is evaluated, the rate at which future costs and benefits should be discounted depends upon their maturity and risk profile. When the shocks to the growth rate of consumption per capita are persistent, it is socially desirable to use a decreasing term structure of risk-free discount rates, and an increasing term structure of risk premia. These term structures are characterized when the representative agent has Epstein-Zin-Weil preferences and when log consumption follows an AR(1) process. The model is calibrated for 248 countries and economic zones of the World Bank database. The research shows that the efficient evaluation rules of long investment projects are very heterogeneous across countries. Using standard estimations of the preference parameters, the country-average 1-year and 20-year risk-free discount rates −1.42% and −3.27%. The 1-year and 20-year aggregate risk premia are respectively 4.21% and 7.12%. This study stresses both the necessity to use country-specific discount rates and the importance of estimating the risk profile of long-dated investment projects.
The report "Harnessing the Potential of Productive Forests and Timber Supply Chains for Climate Change Mitigation and Green Growth" evaluates opportunities for harnessing the potential for climate mitigation and green growth in the forest sector. The analysis focuses on mitigation benefits related to carbon storage in planted forests, harvested wood products (HWP), and the substitution of materials. This emphasis on the role of forestry in climate mitigation in developing countries fills an analytical gap—until now, the role of the productive forest sector has largely been ignored. In addition, the analysis quantifies the climate change adaptation benefits of investments in the HWP supply chain, such as creating economic opportunities and increasing resilience.
Under current conditions, the supply of HWP is unlikely to keep up with expected demand. Increasing economic and population growth in the study countries will drive greater consumption of HWP. Without making the recommendations suggested in this report, increasing consumption will result in large HWP supply gaps.