iii Assessing the Impact of Transport and Energy Infrastructure on Poverty Reduction Cynthia C. Cook Tyrrell Duncan Somchai Jitsuchon Anil Sharma Wu Guobao iv © 2005 Asian Development Bank All rights reserved. Published 2005. Printed in the Philippines. Library of Congress Cataloguing-in-Publication Data Asian Development Bank Study of the effects of transport and energy infrastructure investments on poverty reduction ISBN: 971-561-580-5 Publication Stock No. 040905 Asian Development Bank 6 ADB Avenue, 1550 Mandaluyong City, Metro Manila Philippines Tel: + 63 2 632 4444 Fax: + 63 2 636 2444 information@adb.org The views expressed in this book are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank or the World Bank or their member governments, or those of the Japan Bank for International Cooperation or the United Kingdom Department for International Development. The Asian Development Bank, the World Bank, the Japan Bank for International Cooperation, and the United Kingdom Department for International Development do not guarantee the accuracy of the data included in this publication and accept no responsibility for any consequence of their use. Use of the term country does not imply any judgment by the authors, Asian Development Bank, the World Bank, the Japan Bank for International Cooperation, and the United Kingdom Department for International Development as to the legal or other status of any territorial entity. Editing and Typesetting: Sara Collins Medina Cover Design and Illustration: DoubleSlash Media, Inc. Drawings: Ryan M. Karaan, DoubleSlash Media, Inc. Photographs: pp. xi, 14, 46, 58, 98, 103, 133: Tyrrell Duncan pp. 49, 54, 66, 85, 202: Ian A. Gill All others: Eric M. Sales Fulfillment: ADB Printing Unit v CONTENTS Tables vi Figures viii Boxes viii Abbreviations x Acknowledgments xiii Foreword xv Summary xvii Chapter 1. Introduction 1 Background 1 Methodology 2 Chapter 2. Literature Review Synopsis 7 Introduction 7 Poverty 7 Transport 10 Energy 15 Transport and Energy 18 Chapter 3. Project Review 23 Asian Development Bank Projects 23 World Bank Projects 25 Monitoring and Evaluation 29 Chapter 4. Research Design 33 Definition of Variables 33 Propositional Inventory 35 Knowledge Gap Analysis 35 Conceptual Framework 36 Crosscutting Themes 37 Site Selection 39 Research Design 40 Research Methods 42 Chapter 5. Peoples Republic of China Country Study 45 National Context 45 Case Study Context: Shaanxi Province 49 Methodology 53 Findings 61 Conclusions and Recommendations 88 vi Chapter 6. Thailand Country Study 89 National Context 91 Case Study Context 93 Methodology 98 Findings 102 Policy Impact 127 Chapter 7. India Country Study 135 National Context 135 Case Study Context: Gujarat State 137 Study Districts 141 Methodology 142 Findings 149 Policy Impact 173 Chapter 8. Findings and Conclusions 177 Study Parameters 177 Findings 180 Conclusions 193 Chapter 9. Policy and Operational Implications 199 Policy Recommendations 199 Policy Impact 200 Operational Implications 200 Chapter 10. Priorities for Future Research 205 Infrastructure and Pro-Poor Growth 205 Sector Policy Issues 206 Service Provision 207 Infrastructure and Urban Poverty 207 Large Projects 208 Institutional Issues 208 Gender Issues 208 Monitoring and Evaluation 209 Methodological Aspects 209 Bibliography 211 Appendix. Literature Review 225 Ta bl es Table 5.1. Income-Based Poverty and Asset-Based Poverty 53 Table 5.2. Comparison of Sample Counties, Sample Prefectures, and All Poor 54 Counties in Shaanxi Province Table 5.3. Distribution of Sample Households 55 Table 5.4. Characteristics of Poor and Nonpoor Households (Provincial 59 Database) Table 5.5. Characteristics of Poor and Nonpoor Households (Field Study 60 Database Table 5.6. Use of Transport and Energy Services by Poor and Nonpoor 62 Households vii Table 5.7. Transport Assets Per 100 Households 63 Table 5.8. Energy Assets Per 100 Households 63 Table 5.9. Change in Transport Mode to Market 64 Table 5.10. Change in Transport Mode to County Town 65 Table 5.11. Change in Transport Mode to Provincial Capital 65 Table 5.12. Change in Frequency of Travel to Market 66 Table 5.13. Change in Frequency of Travel to County Towns 66 Table 5.14. Change in Frequency of Travel to Provincial Capital 67 Table 5.15. Change in Travel Times and Travel Costs 69 Table 5.16. Change in Irrigation Methods 69 Table 5.17. Other Fuels Used by Sample Households 70 Table 5.18. Results of Probit Estimation Using Provincial Database 71 Table 5.19. Results of Probit Estimation Using Field Survey Database 73 Table 5.20. Perceived Changes After Transport and Energy Interventions 74 Table 5.21. Household Characteristics by Village Road Access and Poverty 75 Status in 1998 Table 5.22. Changes in Welfare (19982001) by Village Road Access and Poverty 76 Status in 1998 Table 5.23. Changes in Household Production Patterns by Village Road Access 77 and Poverty Status in 1998 Table 5.24. Change in Agricultural Production Before and After Road Access 77 Table 5.25. Household Employment and Income Generated by Road 81 Construction Table 5.26. Comparative County Development After Railway Construction 82 Table 5.27. Contribution of Railway Construction to Local Income and 82 Employment Table 5.28. Household Characteristics by Electricity Access and Poverty Status 85 in 1998 Table 5.29. Changes in Welfare by Electricity Access and Poverty Status in 1998 85 Table 5.30. Changes in Household Production Patterns by Electricity Access and 86 Poverty Status in 1998 Table 5.31. Distribution of Sample Households by Interventions Received 87 Table 5.32. Changes in Welfare by Electricity by Combined Interventions 87 Table 6.1. Distribution of Northeast Region Sample Villages by Transport 94 and Electricity Improvements Table 6.2. Characteristics of Northeast Sample Provinces 96 Table 6.3 Distribution of Rural Households by Degree of Transport and 100 Electricity Improvements Table 6.4. Road and Electricity Impacts on Income for All Rural 103 Households Table 6.5. Road and Electricity Impacts on Income for Poor Rural 104 Households Table 6.6. Road and Electricity Impacts on Expenditure for All Rural 105 Households Table 6.7. Road and Electricity Impacts on Expenditure for Poor Rural 106 Households viii Table 6.8. Road and Electricity Impacts on Education for All Rural 107 Households Table 6.9. Road and Electricity Impacts on Education for Poor Rural 108 Households Table 6.10. Factors Affecting Perceptions of Change Over 10 Years 109 Table 6.11. Perceived Impacts of Rural Road Improvements 110 Table 6.12. Perceived Impacts of Rural Electricity Improvements 114 Table 6.13. Perceived Income Impacts by Poverty Status 117 Table 6.14. Impacts Reported by Households with No Income Impact 118 Table 6.15. Perceived Impacts of Urban Transport Improvements 120 Table 6.16. Perceived Impacts of Urban Electricity Improvements 120 Table 6.17. Perceived Income Impacts by Poverty Status 124 Table 6.18. Road Impacts Reported by Urban Households with No 124 Income Impact Table 6.19. Electricity Impacts Reported by Urban Households with 125 No Income Impact Table 6.20. Purpose of Long-distance Travel by Rural Households 126 Table 6.21. Destination of Long-distance Travel by Rural Households 126 Table 6.22. Mode of Long-distance Travel by Rural Households 126 Table 6.23. Evaluation of Interregional Roads, by Income Groups 128 Table 6.24. Planned Use of Trains, by Income Groups 128 Table 7.1. Sample Households by District and Access to Roads and Electricity 145 Table 7.2. Incidence of Poverty in Sample Households 146 Table 7.3. Sample Average Income by District 146 Table 7.4. Distribution of Sample Households by Occupation 148 Table 7.5. Distribution of Sample Households by Size of Land Holding 148 Table 7.6. Distribution of Sample Cropped Area by Crop 148 Table 7.7. Sample Household Income by Sources 149 Table 7.8. Change in Cropping Patterns 1997/982001/02 151 Table 7.9. Village Time Savings by District and Destination 153 Table 7.10. Distribution of Sample Households by Intervention and Income 155 Table 7.11. Change in Household Income Due toTransport Improvements 157 Table 7.12. Change in Household Income Due to Energy Improvements 158 Table 7.13. Change in Household Health Due to Transport Improvements 158 Table 7.14. Change in Household Health Due to Energy Improvements 159 Table 7.15. Change in Household Education Due to Transport Improvements 160 Table 7.16. Change in Household Education Due to Energy Improvements 160 Table 7.17. Change in Access to Information Due to Transport Improvements 161 Table 7.18. Change in Access to Information Due to Energy Improvements 162 Table 7.19. Change in Household Security Due to Transport Improvements 163 Table 7.20. Change in Household Security Due to Energy Improvements 163 Table 7.21. Impact on Common Resources Due to Transport Improvements 164 Table 7.22 Impact on Common Resources Due to Energy Improvements 164 Table 7.23. Time Savings Due to Transport Improvements 164 Table 7.24. Time Savings Due to Energy Improvements 165 ix Table 7.25. Effects on Participation Due to Transport Improvements 166 Table 7.26. Effects on Participation Due to Energy Improvements 166 Table 7.27. Effects on Bonding Social Capital Due to Transport Improvements 167 Table 7.28. Effects on Bridging Social Capital Due to Transport Improvements 167 Table 7.29. Effects of Energy Improvements on Bonding and Bridging 168 Social Capital Table 7.30. Equitable Access to Benefits Due to Transport Improvements 168 Table 7.31. Equitable Access to Benefits Due to Energy Improvements 169 Table 7.32. Results of Probit Model Testing for Incidence of Poverty 170 Table 7.33. Differences in Per Capita Consumption Expenditures 170 Figures Figure 4.1. Conceptual Framework 34 Boxes Box 1.1. Perceptions of the Poor about Transport and Energy 2 Box 2.1. Role of the Private Sector in Poverty Reduction 9 Box 2.2. Early Evidence on Rural Road Impacts 11 Box 2.3. Womens Transport Needs 17 Box 2.4. The IFPRI Model 20 Box 3.1. Poverty Reduction Effects of Regional Highways and Feeder 24 Roads Box 3.2. Poverty Benefits of Power Rehabilitation in Tajikistan 26 Box 3.3. Road Improvements for Poverty Reduction in the Peoples 27 Republic of China Box 3.4. Impacts of Rural Infrastructure Improvements in Bangladesh 30 Box 3.5. Evaluating the Poverty Impacts of Rural Roads in Viet Nam 31 Box 4.1. Propositional Inventory (Transport) 35 Box 4.2. Propositional Inventory (Energy) 36 Box 4.3. Propositional Inventory (Aggregate Impacts) 36 Box 5.1. Road Construction and Migration for Employment 68 Box 5.2. Profiting from a Power Grid System Reform 70 Box 5.3. Changes in Family Farm Production Patterns 78 Box 6.1. Roads and Electricity Changed My Life 111 Box 6.2. It is Easier to Earn Income Now 115 Box 6.3. The Ironic Impacts of Roads and Electricity 121 Box 6.4. Gender Aspects of Roads and Electricity 130 Box 7.1. Reconciled with the Future Promise for Children 152 Box 7.2. Shahbhai Takes Adventage of Roads and Electricity 155 Box 7.3. A Boost for Girls Education 159 Box 7.4. Disappointed Expectations at a Gujarat Port 172 x xi ABBREVIA TIONS ADB Asian Development Bank ANM primary health center nurse (India) BOOT build, own, operate, transfer CASS Chinese Academy of Social Sciences DFID Department for International Development (UK) DMC developing member country DRI domestic research institute EGAT Electricity Generating Authority of Thailand ESCAP (United Nations) Economic and Social Council for Asia and the Pacific GDP gross domestic product GEB Gujarat Electricity Board GSRTC Gujarat State Road Transport Corporation IFPRI International Food Policy Research Institute IFRTD International Forum for Rural Transport and Development ILO International Labour Organisation IMT intermediate means of transport IPP independent power producer IRAP Integrated Rural Accessibility Planning JBIC Japan Bank for International Cooperation Lao PDR Lao Peoples Democratic Republic LPG liquefied petroleum gas MDG Millennium Development Goal NCAER National Council for Applied Economic Research (India) NGO nongovernment organization NMT nonmotorized transport OECD Organisation for Economic Co-operation and Development PPIAF Public-Private Infrastructure Advisory Facility PPP purchasing power parity PRC Peoples Republic of China PRS Poverty Reduction Strategy PRSP Poverty Reduction Strategy Paper PV photovoltaic R&D research and development RETA regional technical assisstance RIPA Roads Improvement for Poverty Alleviation (PRC) RRMIMP II Rural Roads and Markets Improvement Project II RRP report and recommendation of the President SEB State Electricity Board (India) SPP small power producer SRT State Railway of Thailand TA technical assistance xii CURRENCY EQUIVALENTS In this study, amounts in Peoples Republic of China yuan (CNY) are converted into US dollars ($) at the rate of CNY8.3 = $1.0. Amounts in Thai baht (B) are converted into US dollars at the rate of B42 = $1.0. Amounts in Indian rupees (Rs) are converted into US dollars at the rate of Rs46.5 = $1.0. In this study, $ refers to US dollars. TDRI Thailand Development Research Institute TVE town and village enterprise (PRC) UNDP United Nations Development Programme [...]... change, impacts of changes in service provision, impacts of transport modes other than roads, impacts of energy sources other than electricity, impacts of transport and energy projects on the urban poor, constraints on access by the poor to improved transport and energy services, gender differences in the impacts of transport and energy investments, environmental consequences of transport and energy. .. literature on poverty in Asia and the Pacific, the roles of growth and social development and of infrastructure in poverty reduction, the impact of the PRS on country-level operations and project designs, and the monitoring and evaluation of the strategy, poverty assessment reports, and country strategies and programs The PRS Review incorporates and updates the review carried out for this study Poverty. .. value of public infrastructure investments in promoting sustainable development and poverty reduction Since the 1970s and the identification of poverty with the rural population of the developing world, theory and research on the impact of transport investments on poverty have focused on their role in promoting increased agricultural production and improving the incomes of farm households In energy, they... presents the findings of the technical assistance Above all, it shows how transport and energy infrastructure contributes to poverty reduction, and why these contributions are important One new aspect that emerges is that, in addition to their impacts on income dimensions of poverty, transport and energy have significant impacts on nonincome dimensions such as health, education, personal security, and community... in infrastructure management are redirected to support other programs designed to enhance the productivity and the welfare of the poor Transport and energy investments impact upon the income and nonincome dimensions of poverty The case studies strongly confirmed that transport and energy investments are agents of economic growth that contribute to poverty reduction by raising incomes They also confirmed... improvements, the main hypotheses supported were those concerning improved quality of education and health care for the poor, and increased information flow to the poor Hypotheses of reduced energy costs for the poor and decreased pressure on woodlands were rejected Findings on most other energy hypotheses, including impacts on farm and nonfarm incomes of the poor, were mixed or inconclusive For both rural transport. .. macroeconomic and social policy, as well as sector policy issues • The impact of infrastructure investment on poverty is mediated by the provision of efficient, reliable services to the poor Thus, the study should consider not only improvements in infrastructure but also in transport and/ or energy services, as well as the targeting of such services to the poor Assessing the Impact of Transport and Energy. .. the country contexts and case studies Chapters 8–10 present the findings of the RETA, its policy and operational implications, and priorities for future research Data sources are detailed in the Bibliography Assessing the Impact of Transport and Energy Infrastructure on Poverty Reduction Introduction 5 Transport and energy enable other activities to bring about poverty reduction Policies and approaches... sources and helping improve the productivity of poor households Infrastructure also helps improve health care and education and enhances the contact and communication of the poor with the outside world However, the team found that the positive impacts of transport and energy investments on the poor were constrained by existing policies and institutional arrangements Thailand Country Study The Thailand... evolution, transport and energy infrastructure has remained a priority concern for the clients of development finance institutions, and a major conduit for the flow of funds from the developed to the developing world Recent research on the perceptions of poverty by poor people around the world also shows that they experience lack of access to transport and energy infrastructure as a process of social . care and education and enhances the contact and communica- tion of the poor with the outside world. However, the team found that the positive impacts of transport and energy investments on the. differences in the impacts of transport and en- ergy investments,  environmental consequences of transport and energy investments, and  governance and institutional issues. The main focus of the field. why these contributions are important. One new aspect that emerges is that, in addition to their impacts on income dimensions of poverty, transport and energy have significant impacts on nonincome