World Development 101 (2018) 351–376

Contents lists available at ScienceDirect

World Development
journal homepage: www.elsevier.com/locate/worlddev

The Road to Growth: Measuring the Tradeoffs between Economic

Growth and Ecological Destruction
Richard Damania a, Jason Russ a, David Wheeler b, Alvaro Federico Barra a
a
World Bank, USA
b
Center for Global Development, USA

a r t i c l e i n f o s u m m a r y

Article history: Roads bring significant economic benefits that are vital for development. But they are often also the pre-
Accepted 16 June 2017 cursors to deforestation and other adverse environmental impacts. This paper examines the road-induced
Available online 4 August 2017 tradeoffs between economic growth, deforestation, and biodiversity loss in the Democratic Republic of
Congo (DRC). Decades of conflict have left the DRC’s transport infrastructure among the sparsest and
Key words: most dilapidated in the world. Most of the provincial capitals are unconnected to the capital city, and
Infrastructure improving road connectivity could lead to a significant boost in trade and economic growth. At the same
Economic growth
time the DRC is also home to the second largest rainforest in the world. The iconic Congo forests are a
Forests
Biodiversity
trove of ecological value—some monetizable and most that is not. So the destruction of the DRC’s forests
will have significant environmental ramifications. We provide empirical estimates of the economic ben-
efits of improving market access and reducing transportation costs. We then estimate a forest destruction
function to assess the impact that new or improved roads have on forest clearing. In addition, a novel bio-
diversity index is developed to identify forests of high biodiversity significance. Two simulations are per-
formed to quantitatively demonstrate the impacts of road improvement projects in terms of increased
GDP, forest loss, and biodiversity that are put at risk. To our knowledge, this is the first study to jointly
examine the economic benefits and ecological risks to infrastructure investments. It is envisioned that the
methods employed here can be used to guide future infrastructure investments toward designs which
have a large economic impact while minimizing ecological risks.
Ó 2017 Published by Elsevier Ltd.

1. Introduction ments in protected areas with strong agricultural potential may

Roads bring significant economic benefits that are vital for
development. But they are often also the precursors to deforesta-
tion and other adverse environmental impacts. The response of
conservation managers in tropical forests has typically been reac-
tive. Attempts are made to limit damage through the demarcation
and protection of areas that are deemed critical for biodiversity
conservation. This strategy seeks to minimize ecological impacts
by preventing or severely restricting road improvements that
increase the profitability of forest clearing within protected areas.
Potential conflict over the desirability of road improvements is par-
ticularly high in forested regions with significant agricultural
potential. When conventional protected-area strategies confront
this conflict, they may fail to protect critical ecosystems for two
reasons. First, governments may seek to minimize economic oppor-
tunity costs by siting protected areas in remote regions with low
agricultural potential that may not coincide with the areas of high-
est ecological value. Second, attempts to restrict road improve-
fail because economic interests overwhelm the limited resources
and political support of conservation managers.
This paper presents an empirical approach that seeks to mitigate
such conflicts by developing rigorous tools that can help steer
infrastructure development toward sites where economic benefits
can be realized, while ecological damage is avoided and minimized.
We illustrate this approach by estimating the potential impacts of
road upgrading in the Democratic Republic of Congo (DRC).
The DRC, with its immense forests and woeful road network,
presents an apt case study for this exercise. Decades of conflict
and neglect have left the DRC’s transport infrastructure among
the sparsest and most dilapidated in the world, even by the stan-
dards of other low-income countries (Africa Infrastructure Country
Diagnostics 2008). In many parts of the country, traveling to the
capital, Kinshasa, by road is impossible and most of the provincial
capitals are unconnected to Kinshasa. Were economic activity
evenly distributed across the country this may not matter signifi-
cantly, but as Figure 1.1 illustrates, GDP in the country is highly

http://dx.doi.org/10.1016/j.worlddev.2017.06.001
0305-750X/Ó 2017 Published by Elsevier Ltd.
352 R. Damania et al. / World Development 101 (2018) 351–376
geographically concentrated around the capital Kinshasa, with
peaks in income around a few other areas such as Lubumbashi,
Mbuji-Mayi, and Kivu. Connecting regions that flourish with those
that lag (relatively) could provide a significant boost to economic
growth. Given the vast distances and extreme variations in the spa-
tial distribution of GDP, there are compelling reasons for improving
inter-provincial as well as intra-provincial connectivity to promote
trade and economic cohesion.
However, the DRC is also home to the second largest rainforest
in the world. The iconic Congo forests are a trove of ecological
value—some monetizable and much that is not. The DRC’s forests
are distinguished by the unusually high number of endemic and
endangered species (UNESCO, 2010).1 The carbon sequestered by
these forests (a stock of about 30–40 gigatons) corresponds to about
3–5 years of CO2 equivalent emitted globally (as a flow). So the
destruction of the DRC’s forests could have global ramifications.
Roads often catalyze a process of deforestation and land conversion.
In addition, they are also accompanied by a litany of other forms of
environmental degradation, especially in the DRC, where enforce-
ment of regulations is immensely challenging. For instance, poaching,
illegal trapping of exotic wildlife for the pet trade, fuel wood collec-
tion, and forest fires are among the plethora of problems that accom-
pany roads in biologically sensitive forests. This suggests the need to
establish procedures that preempt adverse and often irreversible
consequences of road construction and yet allow for benefits of
development to be realized.
The exercise outlined in this paper draws on a variety of disci-
plines—GIS analysis, econometrics, and conservation biology—to
create an approach that could guide the location and level of invest-
ments in roads. The methodology involves four steps. First the ben-
efits of transport infrastructure are estimated using regression
analysis. We provide what we believe are the most accurate esti-
mates of transport costs that are available for the DRC and carefully
address potential sources of endogeneity bias arising from the non-
random placement of roads and the spatial sorting of cities.2 Next, a
disaggregated spatial data set of forest loss is used to estimate the
effects of roads on forest cover. Recognizing that not all forests are
of identical ecological significance, a new composite metric of biodi-
versity is developed to identify forests of high (and low) biodiversity
significance. In the final stage the spatial estimates are combined to
simulate the effects of different policies and identify hotspots where
risks are high and benefits relatively low, areas where the reverse
holds, and regions where there are large trade-offs between eco-
nomic and ecological goals. To our knowledge, the present paper rep-
resents the first attempt to combine these unconnected strands of
research to enable better informed approaches to road infrastructure
investments.
The remainder of the paper is organized as follows. Section 2
motivates the analysis with a brief review of prior empirical
research on the econometric estimates of road infrastructure bene-
fits, the economics of forest clearing, and measures of biodiversity.
Section 3 describes several of the datasets employed in the analysis.
Section 4 presents the results from estimating the benefits of road
1
There is very high endemism not only at the species level but also at the genus and
even family levels in the Congo. On the other hand there is a lower level of species
diversity (in aggregate) than the Amazon rain forests. The lowland forests of DRC
contain around 10,000 plants, of which 30% are endemic, while the afro-montane
forests contain around 4,000 species, of which 70% are endemic (including 2 endemic
families). There are a host of endangered and charismatic mammals including the
okapi, bongo, genet, gorilla, and bonobo. Many of the small primates and duikers are
also unique to these forests. In addition to the endemic and famous Congo peacock the
forests contain at least 5 bird families endemic to Africa. There are still discoveries of
new species in the Congo.
2
Since roads are not randomly placed and usually connect nodes of economic
opportunity, OLS estimates will be biased upward since it would capture the
differentially higher opportunity of the connected regions.
construction in the DRC. Section 5 presents estimates of a defor-
estation model that incorporates the impact of road improvement.
Section 6 derives a biodiversity index of the Congo Basin that incor-
porates four distinct measures of biodiversity. In Section 7, we
explore the implications of our results for local, regional, and
national forest clearing. Section 8 concludes the paper with caveats.
2. Prior research
The purpose of this section is to briefly review several hitherto
distinct strands of literature: the literature on estimating the eco-
nomic benefits of roads, a different body of work on the empirical
drivers of deforestation, the environmental damage from develop-
ment, and research on biodiversity indicators. The objective is not
to provide a comprehensive assessment of these burgeoning areas
of research, but merely to highlight some of the more relevant
contributions.
The empirical literature on the economic benefits of roads is vast
and rapidly evolving. Much of the recent analysis is concerned with
identifying causal relationships between investments in roads and
consequent economic impacts, with approaches that have varied
considerably over time. Researchers have examined the effects of
road infrastructure and investments in transport on aggregate pro-
ductivity, usually measured by GDP (Aschauer, 1989; Ihori, Doi, &
Kondo, 2001), with ambiguous results. To a large extent the contra-
dictory evidence and the ensuing debates are a consequence of
identification and reverse causality problems.
Recent papers have used more rigorous and compelling identifi-
cation strategies to shed light on these issues (Donaldson, 2010;
Datta, 2012; Faber, 2014). One solution is to use panel data meth-
ods (Khandker & Koolwal, 2011), but the approach is limited by a
lack of suitable time series data, especially in developing countries.
Other papers exploit natural experiments (Donaldson, 2010), com-
paring regions where infrastructure investments were made with
regions where they were planned but never completed. However,
such assessments are uncommon since the fortuitous circum-
stances for a natural experiment are rarely encountered. Instead,
much of the literature uses a difference-in-difference (Datta,
2012), or difference-in-difference with an instrumental variable
(Faber, 2014) approach, or some exogenous geographic features
to exploit natural differences in a sample (Jacoby & Minten, 2009;
Shrestha, 2012; Emran & Hou, 2013). The approach used in this
paper is most closely related to that of Faber (2014), Damania,
Berg, Russ, Federico Barra, Nash, & Ali (2017), and Russ, Berg,
Damania, Barra, Ali, & Nash (2017) which rely on an instrumental
variable based on exogenous variation in geography.
A distinct theoretical and empirical research on the determi-
nants of forest clearing has provided many useful economic policy
insights. The von Thunen model offers a convenient framework for
understanding the process and links between the spatial determi-
nants of deforestation (Angelsen, 2007). Briefly, interventions such
as (say) investments in roads that increase the payoffs to alterna-
tive activities such as agriculture, will induce a decline in forest
cover. Eventually, when diminishing returns set in, this trend
may be reversed and some of the lost forest may recover as sug-
gested by forest transition theories. Empirical results are generally
consistent with this model in which the conversion of forested land
varies with rents and potential profitability. Nelson and Chomitz
(2009) and Rudel, Defries, Asner, and Laurance (2009) have studied
this relationship across countries over multi-year intervals. Within
countries, numerous econometric studies have estimated the
impact of economic, social, and geographic drivers on deforestation
during multi-year intervals. Some studies have used aggregate data
for states, provinces, or sub-provinces (e.g., studies for Brazilian
municipios by Goeschl and Igliori (2006), and Mexican states by
 R. Damania et al. / World Development 101 (2018) 351–376
Figure 1.1. Local GDP in DRC, 2006. Source: Ghosh et al. (2010).
Barbier & Burgess, 1996). Many studies have also used GIS-based
techniques to obtain multi-year estimates at a higher level of spa-
tial disaggregation (e.g., Cropper, Puri, Griffiths, Barbier, & Burgess,
2001 for Thailand; Agarwal, Gelfand, and Silander (2002) for Mada-
gascar; and Vance & Geoghegan, 2002 for southern Mexico). In
rarer cases, studies have used annual national or regional aggregate
time series for extended periods (e.g., Zikri, 2009 for Indonesia;
Ewers, Laurance, & Souza, 2008 for Brazil).
In perhaps the most comprehensive survey of the literature,
Geist and Lambin (2002) show that tropical deforestation is driven
by broad macro-level factors such as institutions as well as factors
that drive agricultural expansion, wood extraction, and infrastruc-
ture. Their analysis suggests that too much emphasis may have
been given to other factors such as population growth and shifting
cultivation as primary causes of deforestation.
The most recent research has exploited higher resolution spatial
panel data for more precise identification of deforestation and for-
est degradation drivers. In a synthesis of national-level studies,
Hosonuma et al. (2012) find that deforestation drivers are similar
in Africa and Asia, while degradation drivers are more similar
between Latin America and Asia. Globally, commercial and subsis-
tence agriculture are the primary and secondary drivers of defor-
estation, while degradation is driven, in decreasing order of
importance, by timber extraction and logging, fuelwood collection,
charcoal production, and livestock grazing. In a multi-country
study for South America and Southeast Asia, Henders, Persson,
and Kastner (2015) find that production of four commodities—beef,
soybeans, palm oil, and wood products—accounts for 40% of defor-
estation. In Southeast Asia, Richards and Friess (2016) augment
previous research on moist tropical forests by focusing on clearing
of coastal mangrove systems. Finding a lower-than-expected role
for coastal aquaculture, they identify rice agriculture as a major dri-
ver of mangrove loss in Myanmar, and oil palm expansion as a crit-
ical threat in Malaysia and Indonesia. In South America, Sy et al.
(2015) find that the primary deforestation drivers are pasturage
(71% of cleared area) and commercial agriculture (14%). In a related
assessment for Latin America using MODIS imagery, Graesser, Aide,
Grau, and Ramankutty (2015) find forest-clearing contributions of
57% for new pastureland and 17% for cropland.
Of particular relevance for the current study are recent findings
on deforestation drivers in Sub-Saharan Africa (SSA). DeFries, Rudel,
Uriarte, and Hansen (2010) find that deforestation rates in SSA
remained significantly below rates in Latin America and Southeast
Asia during the period 2000–05. Rudel (2013) and Fisher (2010)
find that population-driven expansion of lands for tropical food
crops explains a significant proportion of moist forest clearing in
353
many SSA countries. However, Rudel (2013) identifies accelerated
urbanization as a deforestation-reducing factor in countries where
resource extraction is a dominant source of government revenue.
Mayaux et al. (2013) modify this finding by linking accelerated
urbanization to more rapid deforestation around cities and an
emerging spatial pattern of deforestation along transportation cor-
ridors between cities. Rudel (2013) stresses the importance of the
Mayaux results for the DRC, while noting the additional role played
by conflict-related population displacement.
A somewhat smaller and distinct literature explores the conse-
quences of road building and other development activities on wild-
life poaching and hunting. In an empirical analysis of hunting
pressures Abernethy, Coad, Taylor, Lee, and Maisels (2013) find that
the devastating decline in Central African elephant numbers is
highly correlated with proximity to roads as well as other
country-level factors such as governance indicators, and population
density. The most commonly hunted species in African rainforest
are small ungulates, monkeys, and rodents, usually trapped with
wire and snares (Abernethy, Coad, Taylor, Lee, & Maisels, 2013).
Evidence suggests that roads increase bushmeat hunting not only
by improving access for hunters, but also by stimulating local
demand and facilitating wildlife trade out of local villages. When
roads improve access to markets, larger and more commercially
valuable species such as forest elephants and apes are targeted
using more expensive hunting techniques, resulting in local extinc-
tions as predicted by open access models of species harvesting
(Laurance et al., 2006; Damania, Milner-Gulland, & Crookes, 2005).
Finally there is an extensive literature on measuring and defin-
ing biodiversity. Most contributions acknowledge that biodiversity
is too complex to be adequately quantified in a single measure that
is suitable for all purposes. Instead, a variety of measures have been
developed that vary in spatial scale and level of detail, with the
suitability of each determined by the problem under consideration.
For instance, Noss (1990) distinguishes between biotic indicators
that assess the status of particular species and abiotic ones that
refer to the broader habitat and seek to capture the level of environ-
mental stress in an area. Measures also differ by spatial scale. Alpha
biodiversity refers to the range of species found within a given area
(such as an ecological compensation area), whereas beta biodiver-
sity compares the abundance and distribution across a larger spa-
tial scale, often between areas, and gamma diversity is the total
species diversity in a landscape. There is debate on how each of
these should be measured and how they mathematically relate to
each other. The widely used IUCN Red List of Species is one of the
best known examples of this approach. Comparisons of biodiversity
richness between regions are difficult and often require judgements
354 R. Damania et al. / World Development 101 (2018) 351–376

to be made regarding the complementarity or uniqueness of partic-
ular species and groups. To capture these attributes, measures of
species endemism, spatial turnover, and genetic distance on the
phylogenetic tree have also been developed (Kinzig & Harte,
2000; Duelli & Obrist, 2003). In the spirit of measuring ecosystems
rather than individual species, WWF has developed maps of ecore-
gions that contain distinct assemblages of species and biota across
a large range of flora and fauna (Groves et al., 2002). In Section 6,
this paper develops a composite biodiversity measure that seeks
to capture the main features of these metrics—species abundance,
genetic rarity, endemicity, and ecoregions.
3. Data
In this section we present a brief discussion of several of the spa-
tially explicit datasets used in this analysis. Much of our data is cal-
culated from raster datasets which are extracted into a gridded
framework. For our analysis on the economic impacts of roads, grid
cells are 5 arcmin2, or approximate 10 km2 at the equator. When
we analyze the impact of roads on deforestation, we use a smaller
aggregation level, 2.7 km2, as the forestry data are available at a
much finer level.
(a) Calculating transport costs
In order to estimate the cost of transporting goods around the
DRC road network, we first compile the road network. Since no
up-to-date and complete road network exists, we assemble it from
two different sources. We begin with a GIS vector of the transporta-
tion network obtained from Delorme, which provides a thorough
data set of both major trunk roads, as well as rural roads throughout
the country. This network is overlaid with another road network
constructed for the African Infrastructure Country Diagnostic
(AICD), which includes quality attributes such as whether the road
is paved/unpaved, the road type (primary, 7-m-wide roads;
secondary, 6-m-wide roads; and tertiary, 5-m-wide roads), and road
quality (good; fair; poor).3 These attributes are transferred to
Delorme’s vector data. Finally, the road network is updated by making
adjustments based on information obtained from transport experts
familiar with DRC. To our knowledge this provides the most complete
data set of the network that is currently available.
In order to calculate the costs of traveling along the road net-
work, we apply the Highway Development Management Model
(HDM-4), a standard model frequently used by road engineers. This
model takes as inputs the road attributes available in the AICD
dataset, the roughness of terrain along the road, as well as
country-level information on various factors which can affect the
price of transporting goods (i.e., price of fuel, labor costs, etc). The
output is the cost per kilometer of transporting a ton of goods in
a heavy truck, for every possible road classification combination.4
We use this model to calculate the least-cost route for traveling from
the centroid of every grid cell within the DRC to every market, where
a market is defined as a city of 50,000 people. The least cost market is
then determined by the location that is cheapest to travel to.5
3
Roads not appearing in AICD are assumed to be tertiary, unpaved, and of poor
quality. Given the state of DRC’s road network, we believe this to be a very safe
assumption.
4
See Highway Development and Management Model (HDM-4) Appendix for
further detail.
5
This paper analyzes the combined effect of both large transport infrastructure
(such as highways) and rural roads. Thus, it differs from Michaels (2008), Datta (2012),
Faber (2014) and Banerjee, Duflo, and Qian (2012), that analyze the impact of large
transport infrastructures, highways, and railways. It also differs from Jacoby and
Minten (2009), Dorosh, Wang, You, & Schmidt (2009), Khandker and Koolwal (2011),
Mu and van de Walle (2007) that analyze the impact of smaller rural roads.
(b) Economic outcome variables
In order to estimate the economic impact of improving road
infrastructure, we utilize two separate datasets. The first, our main
outcome variable, measures local GDP at the grid cell level. To test
the robustness of our estimates, we also employ a dataset which
measures crop production for several important crops in the region.
Our measure of local GDP is obtained from Ghosh et al. (2010).
This dataset uses a model to spatially disaggregate 2006 GDP into
a gridded framework by utilizing nighttime light satellite imagery
collected by the National Oceanic and Atmospheric Administration
(NOAA), as well as data on agricultural GDP. The methodology is
predicated on the fact that brighter lights at night have been shown
to be associated with higher levels of economic activity, particu-
larly in urban areas (Elvidge et al., 2001; Ebener, Murray, Tandon,
& Elvidge, 2005; Sutton, Elvidge, & Ghosh, 2007; Chen &
Nordhaus, 2011). Indeed, several recent studies have either directly
used nighttime lights, or employed modified functions thereof as a
proxy for economic activity (e.g., Doll, Muller, & Elvidge, 2000;
Henderson, Storeygard, & Weil, 2012; von Uexkull, Croicu, Fjelde,
& Buhaug, 2016; Henderson, Storeygard, & Deichmann, 2017).
The Ghosh et al. dataset offers an important improvement over
directly using nighttime lights to proxy for economic activity.
Nighttime lights have been shown to significantly underestimate
rural economic activity, where access to electricity can be relatively
sparse (Mellander, Lobo, Stolarick, & Matheson, 2015). This is a par-
ticular concern in a country like DRC, where GDP from rural agricul-
ture makes up a significant percentage of total GDP (fluctuating
between 20 and 25% of total GDP over the past decade (World
Bank, 2017)). In the Ghosh et al. dataset, non-agricultural GDP is
modeled separately from agricultural GDP, thus avoiding the urban
bias intrinsic to raw nighttime lights data.
To test the robustness of our local GDP estimates, we also esti-
mate the impact of improving transport infrastructure on agricul-
tural productivity. To do so, we utilize the Spatial Production
Allocation Model (SPAM) dataset from HarvestChoice. (2012),
which contains gridded data on the production of several crops
for DRC. Five crops, which are particularly important in DRC are
selected: cassava, bananas/plantains, maize, groundnuts, and rice.
According to the Food and Agriculture Organization (FAO), in
2011 these 5 crops accounted for approximate 75% of the value of
all crops produced in DRC (FAO & Faostat, 2017).
(c) Forest cover and forest loss
To measure deforestation, this study uses the first high-
resolution, consistently derived estimates of global forest clearing,
published by Hansen et al. (2013). The data are tiff panels at
30 m2 spatial resolution for 2000–12. These have been converted
to annual files in which cleared pixels are assigned the value 1 in
the year when most clearing occurred. Uncleared pixels are
assigned the value 0. For tractability the pixels are aggregated to
2.7 km2 grid cells. However, each grid cell contains 8,100 pixels
each of 30 m2; so total counts of cleared pixels within grid cells
are equivalent to deforestation rates. This aggregation therefore
still allows us to observe the impact of small-level, artisanal defor-
estation which is quite common in DRC. Henceforth, the 30 m2 pix-
els are referred to as ‘‘Hansen pixels” and the aggregated grid cells
are referred to as ‘‘Hansen grid cells”.
4. Estimating the benefits of roads
In this section, we estimate the economic benefits of improving
road infrastructure. In order to do so, we estimate a cross-sectional
regression where we test the relationship between market access
via the road network, and several economic outcomes. Specifically,
 R. Damania et al. / World Development 101 (2018) 351–376
we estimate the benefits of reducing the costs of traveling to the
cheapest market as defined in (a). In order to test this relationship,
we estimate the following equation:
lnðY i Þ ¼ b0 þ b1 lnðT i Þ þ b2 C i þ X 0i c þ ei ð4:1Þ
where Y i is output or welfare in location i, T i is the cost of traveling
to the cheapest market from location i, C i is the conflict intensity
around cell i, and X i is a vector of control variables. In our main
set of results, Y i represents local GDP (in millions USD) in grid cell
i, as described in (b). In subsequent results, we also replace local
GDP with agricultural production (in tonnes) of several staple crops
to DRC. Conflict intensity around cell i, C i , is calculated using data
from the Armed Conflict Location Events Dataset (ACLED) version
4 (Raleigh, Linke, Hegre, & Karlsen, 2010). Since the impacts of con-
flict spill over beyond the precise location where a violent encounter
may have occurred, we transform points of conflict into conflict
intensity, using a standard kernel density function. To calculate
the intensity of conflict around any point, the kernel density func-
tion takes a weighted average of the fatalities of all the conflicts
around that point. The magnitude of the weight declines with dis-
tance from the point, according to the chosen kernel function.6
Control variables included in X i enter in quadratic form, and
include: population of cell i, obtained from LandScan (2006);
agro-ecological potential yield of cell i, obtained from GAEZ (FAO
and IIASA 2000)7; and Euclidean distance to the nearest mine, calcu-
lated from data available from the National Minerals Information
Center of the USGS (Matos, Miller, & Barry, 2015). Because of the
granularity of the pixels, and the focus on measuring the effect of
reducing the transport costs to the nearest markets, all of which
are cities, we remove urban areas from the dataset,8 as well as grid
cells which have zero agro-ecological potential (such as lakes and riv-
ers, however, we do not omit cells which have positive agro-
ecological potential, but zero agricultural production).
When estimating Eqn. (3.1), there are several identification and
estimation challenges that arise. These include: (1) estimating the
cost of transporting goods around the road network; (2) endogene-
ity bias arising from non-random placement of roads; (3) endo-
geneity bias arising from spatial sorting of people (i.e., historic
migration) and cities; (4) endogeneity bias arising from two-way
causality between conflict and incomes/production; and (5) bias
arising from spatial autocorrelation. We will briefly discuss each
of these challenges and how they are handled.
Recognizing that roads are non-randomly placed, and often sited
where they will have the biggest economic impact, ordinary least
squares (OLS) estimates will be biased. Hence, we adopt an instru-
mental variable (IV) strategy to eliminate this bias. The literature
on the economic benefits of roads typically relies on one of two
types of IVs; straight line, or ‘‘Euclidean distance” IVs, and historical
route IVs. Of late, thanks in part to greater access to digitized histor-
ical maps and books, the use of historical road IVs has been growing.
While these two types of IVs are very different in their formulation,
they are both attempts at estimating the same thing; namely, the
6 9
See Conflict Kernel Function Appendix for more information.
7
When estimating crop production functions, the acro-ecological potential yield of
the specific crop being estimated is included. When estimating local GDP, the acro-
ecological potential yield of cassava, bananas/plantains, and groundnuts are all
included as these are three of the most important crops in DRC in terms of total
production value.
8
The methodology for determining which pixels of the Landscan dataset are urban
areas is as follows. DRC’s urbanization rate as defined by the Central Intelligence
Agency World Factbook was 34.3% in 2011 (see: https://www.cia.gov/library/publi-
cations/the-world-factbook/fields/2212.html). The total population in the Landscan
dataset is approximately 68.8 million, implying an urban population of 23.6 million.
The pixels with the largest number of people according to Landscan are marked as
being urban pixels until the total number of people living in these marked pixels
equals 23.6 million. These marked pixels are then omitted from the regressions.
355
natural way for humans to travel over land, absent the presence of
a road network. Historical routes are useful as IVs, in that they rep-
resent the easiest path to travel over land. As these historical paths
were constructed with little or no technology, they generally follow
a smoother terrain and have been used for hundreds of years, and
are thus the most cost effective routes to construct a road. At the
same time, they are not correlated with the current economic ben-
efits that lead to the endogeneity bias, given that in many cases,
these routes were constructed well over 100 years ago.9,10
Following this reasoning, we generate a new instrument, called
the Natural–Historical path (NHP). As suggested by its name, the
NHP takes into consideration historical data on caravan routes from
the 19th century used to transport ivory and other goods, as well as
the terrain and historical land cover within DRC to estimate the
quickest path, on foot, to and from anywhere within DRC’s borders,
in the absence of any transport infrastructure. The NHP is affected
by the terrain and land cover of the land between location i and the
market, and not geographic attributes at either of those points
themselves, suggesting that the exclusion restriction will not be
violated. For more information on how the NHP was constructed,
see the Natural–Historical Path Appendix.
A combination of both the natural path and historical caravan
data represents an improved estimate of how people traveled over
land in prior centuries, and thus, it is arguably a suitable IV for
transportation cost. A major problem with only using historical
path data is that people now live in areas that may have been unin-
habited, or not a part of the trade network, many years ago. Histor-
ical path data will therefore not be able to identify the likely paths
that would have been used to travel to and from those locations.
Using natural path data, we are able to fill in gaps in the historical
caravan data to get a complete picture of the optimal historical tra-
vel paths. In addition to the NHP, we also use Euclidean distance to
the nearest market as an instrument for travel costs.
Historic migration (i.e., spatial sorting of people), and non-
random placement of cities (i.e., spatial sort of cities), may also bias
regression estimates if not properly accounted for. If people and
cities tend to locate where economic potential is highest, either
because of natural endowments or available infrastructure, then
cross-sectional estimates of the effect of market access on economic
outcomes will be biased. In order to account for this, we include two
sets of control variables in tandem. The first is the agro-ecological
potential of the land, which will account for natural differences in
land fertility and climate. Secondly, we also include marketshed
fixed effects, which are fixed effects based on the different markets
that each location travels to (i.e., is their cheapest market). This con-
trols for other natural as well as human-made (e.g., infrastructure)
endowments that might contribute to migration into and out of
the area, or the formation of cities. Including both of these variables
in the regression should account for regional differences that might
lead one area to outperform another economically.
The conflict variable also has the potential to bias the regression
due to the fact that causality between economic production and
conflict can run in both directions. Conflict, for obvious reasons,
While these IVs are desirable, they are not always feasible if data on historical
paths are unavailable. In these cases, researchers often rely on straight line IVs. These
variables are usually correlated with historical paths, given that the quickest path
between two points is usually the path with the shortest length—the straight line.
However, they cannot account for the fact that the topography of the land may make
traveling in a straight line impossible, or extra costly, making these IVs potentially
quite weak.
10
Some recent examples of papers employing historical route IVs include: Duranton,
Morrow, & Turner, 2014, which used routes from major exploration expeditions in the
US between the 16th and 19th centuries as instruments for the US interstate highway
system; Garcia-López, Viladecans-Marsal, and Holl (2013), which used ancient Roman
roads, among others, as exogenous sources of variation in Spain’s current highway
system; and Martincus et al., 2013, which used the Incan road network to instrument
for Peru’s current road infrastructure.
356 R. Damania et al. / World Development 101 (2018) 351–376

Table 4.1
Effects of transport costs on local GDP

Dependent Variable: (1) (2) (3) (4) (5)

OLS 2SLS Spatial 2SLS
ln(GDP) ln(Cost to Market) ln(Conflict Fatalities) ln(GDP) ln(GDP)
ln(Cost to Market), USD 0.0330*** 0.141** 0.083***
(4.25) (2.39) (8.15)
ln(Conflict Fatalities) 0.00392* 0.122* 0.049***
(1.93) (1.77) (4.29)
ln(Population) 0.526*** 0.0045*** 0.0032 0.525*** 0.681***
(59.11) (4.04) (0.735) (59.89) (118.64)
ln(Population)^2 0.0356*** 0.0009*** 0.0002 0.0356*** 0.023***
(51.66) (7.04) (0.867) (50.70) (49.89)
ln(Distance to Mine), km 0.193*** 0.1626 ***
0.8210*** 0.300*** 0.164***
(2.96) (5.18) (4.60) (3.22) (10.40)
ln(Distance to Mine)^2, km 0.0212*** 0.0149*** 0.1253*** 0.0371*** 0.02***
(3.21) (4.64) (6.45) (3.25) (10.40)
ln(Natural Path), hours 0.2833*** 0.1160
(24.15) (1.24)
ln(Euclidean Distance), km 0.6288*** 0.8854***
(50.78) (8.97)
ln(Distance to East Border), km 0.0845*** 0.2801***
(13.78) (5.90)
Other variables included: Quadratic terms for agricultural potential yields of cassava, bananas/plantains, groundnuts, maize, and rice; and
marketshed fixed effects
N 23,489 23,489 23,489 23,489 23,489
R-sq 0.930
Hansen J p-value 0.2236
Kleibergen–Paap LM p-value 0.0000
Kleibergen–Paap F-stat 10.023

Note: Sample includes all non-urban cells. Columns 1 presents coefficients from an OLS regression with ln(local GDP) as the dependent variable. Columns 2–4 present 2SLS
regressions, with the first stage for ln(cost to market) and ln(conflict fatalities) in columns 2 and 3, respectively, and the second stage in column 4. Robust t-statistics are in
parentheses. Column 5 presents spatial 2SLS estimates with bootstrapped standard errors in parentheses. *p < 0.1, **p < 0.05, ***p < 0.01.

can lead to lower investment levels, lower incomes, and lower wel-
fare in general. At the same time, lack of economic opportunities
and poor institutions (e.g., rule of law) can also lead some to join
rebel or insurgent militias.11 This implies that conflict is likely to
occur in poorer areas, and is also likely to depress these areas further,
resulting in a two-way causality. We therefore address this potential
bias by including an additional instrument which measures the dis-
tance from the grid cell centroid to the eastern border with Uganda,
Rwanda, and Burundi, as there is greater conflict along this border.
Finally, spatial autocorrelation has the potential to bias both the
estimates and their standard errors. In order to account for this, we
run a spatial bootstrapping technique in which we re-sample the
entire dataset, randomly selecting a single-grid cell, and removing
all grid cells within 65 km12 of it. We continue to randomly sample
the dataset until there are no remaining grid cells. The end result is a
dataset with between 414 and 443 observations which are spatially
independent. We generate 3,900 of these datasets and use them to
calculate bootstrapped estimates and standard errors which are not
biased by spatial autocorrelation.
We now present results from estimating Eqn. (4.1). Estimates
when the dependent variable is local GDP are shown in Table 4.1.
Column 1 presents coefficients when Eqn. (4.1) is estimated via
OLS, and columns 2–4 present two-stage least-squares (2SLS)
regressions, with the first stage for ln(cost to market) and ln(conflict
fatalities) in columns 2 and 3, respectively, and the second stage in
column 4. Column 5 then presents estimates from a spatial 2SLS
regression. Because all variables are in logarithmic form, we can
interpret coefficients as elasticities. We see in column 4 that reduc-
ing transport costs to the local market by 10% would lead to an
11
The causes of conflict are not always cut and dried, however. While those who
create conflict may originate from areas with low economic opportunities, often
conflict arises around areas with wealth, as there are more opportunities for theft.
12
The distance of 65km was determined by examining a spatial correlogram of the
local GDP data.
increase in local GDP by 1.41%. As one would expect, conflict tends
to reduce local GDP. We also see that local GDP increases convexly
in population, and decreases concavely with distance to mine.
First-stage estimates in columns 2 and 3 show that our instruments
strongly pass the inclusion restriction, with higher natural path and
Euclidean distance values associated with increased costs to travel
to the market, and conflict fatalities increasing with distance to
the Eastern border. We also fail to reject the Hansen J null hypoth-
esis that our over-identifying restrictions are valid, we reject the
null hypothesis of the Kleibergen–Paap LM test of under identifica-
tion, and the Kleibergen–Paap F-stat is above 10, which implies that
this regression likely does not suffer from weak instruments. The
diagnostic tests therefore give confidence in our chosen instru-
ments. Finally, column 5 confirms that these coefficients and errors
terms are not significantly biased due to spatial auto-correlation,
with the coefficients changing only slightly (becoming slightly
smaller for cost to market and conflict variables), and retaining their
statistical significance.
Tables 4.2–4.6 display results when production of cassava,
bananas/plantains, maize, groundnuts, and rice, respectively, are
the dependent variables. The 2SLS results in column 4, and the
spatial 2SLS results in column 5 of the tables show that the coeffi-
cient on ln(cost to market) is negative and significant, implying that
reducing the cost to market would increase the production of these
5 staple crops.13 The results in the spatial model are highly
statistically significant, and largely consistent with the 2SLS results,
albeit a little smaller in magnitude. We also note that the elasticities
on ln(cost to market) for the agricultural production estimates are
13
We note that for some of the crops, the Hansen-J test rejects the null hypothesis,
suggesting that the over-identifying restrictions are not valid. This is not surprising as
one might not expect the same set of instruments to pass this test for several different
models. Nevertheless, we do not rely on these results for simulations and merely test
these models to ensure that they are not in disagreement with our local GDP
estimates, which they are not.
 R. Damania et al. / World Development 101 (2018) 351–376 357

Table 4.2
Effect of transport costs on Cassava Production

(1) (2) (3) (4) (5)

OLS 2SLS Spatial 2SLS
Dependent Variable: ln(Cassava Production) ln(Cost to Market) ln(Conflict Fatalities) ln(Cassava Production) ln(Cassava Production)
ln(Cost to Market), USD 0.203*** 1.876*** 1.126***
(2.70) (3.96) (11.14)
ln(Conflict Fatalities) 0.0293 1.805*** 1.087***
(1.26) (3.44) (9.51)
ln(Population) 0.227*** 0.0046*** 0.0069 0.227*** 0.124***
(15.80) (4.36) (0.69) (9.19) (5.31)
ln(Population)^2 0.0356*** 0.0011*** 0.0013 0.0320*** 0.044***
(14.21) (9.65) (1.31) (9.61) (20.67)
ln(Distance to Mine), km 2.767*** 0.0792*** 0.6984*** 4.074*** 2.54***
(4.00) (2.60) (4.36) (4.75) (16.77)
ln(Distance to Mine)^2, km 0.286*** 0.0066** 0.0131 0.315*** 0.198***
(3.97) (2.10) (0.77) (3.93) (14.35)
ln(Natural Path), hours 0.2791*** 0.1510*
(24.08) (1.67)
ln(Euclidean Distance), km 0.6329*** 0.9568***
(53.30) (10.11)
ln(Distance to East Border), km 0.0551*** 0.3120***
(8.86) (7.28)
Other variables included: Quadratic terms for agricultural potential yields of cassava and marketshed fixed effects
N 26,384 26,384 26,384 26,384 N per sample: 414–443
R-sq 0.308 # Samples: 3,900
Hansen J p-value 0.2153
Kleibergen–Paap LM p-value 0.0000
Kleibergen–Paap F-stat 16.821

Note: Sample includes all non-urban cells with positive cassava potential yield, according to FAO/GAEZ. Columns 1 presents coefficients from an OLS regression with ln
(Cassava production) as the dependent variable. Columns 2–4 present 2SLS regressions, with the first stage for ln(cost to market) and ln(conflict fatalities) in columns 2 and 3,
respectively, and the second stage in column 4. Robust t-statistics are in parentheses. Column 5 presents spatial 2SLS estimates with bootstrapped standard errors in
parentheses. *p < 0.1, **p < 0.05, ***p < 0.01.

Table 4.3
Effect of Transport Costs on Banana/Plantain Production

(1) (2) (3) (4) (5)

OLS 2SLS Spatial 2SLS
Dependent Variable: ln(Banana/Plantain ln(Cost to ln(Conflict ln(Banana/Plantain ln(Banana/Plantain
Production) Market) Fatalities) Production) Production)
ln(Cost to Market), USD 0.785*** 1.751*** 1.532***
(13.05) (4.97) (21.90)
ln(Conflict Fatalities) 0.0158 0.862** 0.786***
(0.84) (2.22) (10.03)
ln(Population) 0.263*** 0.0039*** 0.0038 0.251*** 0.059***
(11.45) (3.59) (0.41) (10.50) (2.93)
ln(Population)^2 0.0404*** 0.0009*** 0.0003 0.0384*** 0.059***
(15.96) (7.37) (0.34) (14.35) (35.35)
ln(Distance to Mine), km 7.073*** 0.1674*** 0.6850*** 7.615*** 10.35***
(7.27) (5.41) (3.85) (7.52) (78.84)
ln(Distance to Mine)^2, km 0.455*** 0.0154*** 0.108*** 0.548*** 0.806***
(4.77) (4.85) (5.55) (5.29) (54.729)
ln(Natural Path), hours 0.2796*** 0.1987**
(24.38) (2.20)
ln(Euclidean Distance), km 0.6372*** 1.0068***
(53.12) (10.64)
ln(Distance to East Border), 0.0572*** 0.333***
km
(9.08) (7.81)
Other variables included: Quadratic terms for agricultural potential yields of bananas and marketshed fixed effects
N 23,755 23,755 N per sample: 414–443
R-sq 0.411 # Samples: 3,900
Hansen J p-value 0.0000
Kleibergen–Paap LM p-value 0.0000
Kleibergen–Paap F-stat 19.968

Note: Sample includes all non-urban cells with positive banana/plantain potential yield, according to FAO/GAEZ. Columns 1 presents coefficients from an OLS regression with
ln(Banana/Plantain production) as the dependent variable. Columns 2–4 present 2SLS regressions, with the first stage for ln(cost to market) and ln(conflict fatalities) in
columns 2 and 3, respectively, and the second stage in column 4. Robust t-statistics are in parentheses. Column 5 presents spatial 2SLS estimates with bootstrapped standard
errors in parentheses. *p < 0.1, **p < 0.05, ***p < 0.01.
358 R. Damania et al. / World Development 101 (2018) 351–376

Table 4.4
Effect of Transport Costs on Maize Production

(1) (2) (3) (4) (5)

OLS 2SLS Spatial 2SLS
Dependent Variable: ln(Maize Production) ln(Cost to Market) ln(Conflict Fatalities) ln(Maize Production) ln(Maize Production)
ln(Cost to Market), USD 0.0515 0.968*** 0.655***
(0.83) (3.52) (10.81)
ln(Conflict Fatalities) 0.0322* 0.979*** 0.732***
(1.66) (3.45) (11.58)
ln(Population) 0.190*** 0.0049*** 0.0053 0.188*** 0.181***
(15.67) (4.61) (0.54) (11.82) (9.58)
ln(Population)^2 0.0220*** 0.0011*** 0.0004 0.0221*** 0.002***
(10.60) (9.38) (0.46) (9.64) (15.33)
ln(Distance to Mine), km 1.665*** 0.0782** 0.6661*** 2.332*** 1.25***
(2.60) (2.55) (4.19) (3.31) (10.51)
ln(Distance to Mine)^2, km 0.193*** 0.0066** 0.0062 0.202*** 0.108***
(2.93) (2.10) (0.36) (2.92) (10.37)
ln(Natural Path), hours 0.2874*** 0.2221**
(25.18) (2.49)
ln(Euclidean Distance), km 0.6233*** 1.050***
(53.28) (11.31)
ln(Distance to East Border), km 0.0512*** 0.3701***
(8.88) (8.99)
Other variables included: Quadratic terms for agricultural potential yields of maize and marketshed fixed effects
N 26,914 26,914 26,914 26,914 N per sample: 414–443
R-sq 0.268 # Samples: 3,900
Hansen J p-value 0.3471
Kleibergen–Paap LM p-value 0.0000
Kleibergen–Paap F-stat 13.43

Note: Sample includes all non-urban cells with positive maize potential yield, according to FAO/GAEZ. Column 1 presents coefficients from an OLS regression with ln(Maize
production) as the dependent variable. Columns 2–4 present 2SLS regressions, with the first stage for ln(cost to market) and ln(conflict fatalities) in columns 2 and 3,
respectively, and the second stage in column 4. Robust t-statistics are in parentheses. Column 5 presents spatial 2SLS estimates with bootstrapped standard errors in
parentheses. *p < 0.1, **p < 0.05, ***p < 0.01.

Table 4.5
Effect of Transport Costs on Groundnuts Production

(1) (2) (3) (4) (5)

OLS 2SLS Spatial 2SLS
Dependent Variable: ln(Groundnut Production) ln(Cost to Market) ln(Conflict Fatalities) ln(Groundnut Production) ln(Groundnut Production)
ln(Cost to Market), USD 0.630*** 2.086*** 1.485***
(11.33) (4.93) (20.58)
ln(Conflict Fatalities) 0.0106 1.506*** 0.90***
(0.60) (3.14) (10.88)
ln(Population) 0.251*** 0.0051*** 0.239*** 0.32***
(14.67) (4.76) (11.77) (16.42)
ln(Population)^2 0.0288*** 0.0011*** 0.0259*** 0.022***
(13.68) (9.65) (10.16) (13.18)
ln(Distance to Mine), km 2.412*** 0.0819*** 3.748*** 2.51***
(4.04) (2.65) (4.64) (18.80)
ln(Distance to Mine)^2, km 0.311*** 0.0069** 0.362*** 0.266***
(5.10) (2.19) (4.99) (22.98)
ln(Natural Path), hours 0.2767*** 0.1313
(24.26) (1.47)
ln(Euclidean Distance), km 0.6350*** 0.9225***
(53.93) (9.83)
ln(Distance to East Border), km 0.0663*** 0.2888***
(12.64) (6.26)
Other variables included: Quadratic terms for agricultural potential yields of groundnuts and marketshed fixed effects
N 26,178 26,178 26,178 26,178 N per sample: 414–443
R-sq 0.344 # Samples: 3,900
Hansen J p-value 0.0004
Kleibergen–Paap LM p-value 0.0000
Kleibergen–Paap F-stat 12.421

Note: Sample includes all non-urban cells with positive groundnut potential yield, according to FAO/GAEZ. Column 1 presents coefficients from an OLS regression with ln
(Groundnut production) as the dependent variable. Columns 2–4 present 2SLS regressions, with the first stage for ln(cost to market) and ln(conflict fatalities) in columns 2
and 3, respectively, and the second stage in column 4. Robust t-statistics are in parentheses. Column 5 presents spatial 2SLS estimates with bootstrapped standard errors in
parentheses. *p < 0.1, **p < 0.05, ***p < 0.01.
 R. Damania et al. / World Development 101 (2018) 351–376 359

Table 4.6
Effect of Transport Costs on Rice Production

(1) (2) (3) (4) (5)

OLS 2SLS Spatial 2SLS
Dependent Variable: ln(Rice Production) ln(Cost to Market) ln(Conflict Fatalities) ln(Rice Production) ln(Rice Production)
ln(Cost to Market), USD 0.544*** 2.050*** 1.603***
(10.15) (5.18) (18.74)
ln(Conflict Fatalities) 0.00967 1.449*** 1.028***
(0.56) (3.38) (11.08)
ln(Population) 0.350*** 0.0051*** 0.0082 0.326*** 0.524***
(18.40) (3.38) (0.91) (15.16) (26.45)
ln(Population)^2 0.0324*** 0.0010*** 0.0006 0.0293*** 0.018***
(15.05) (8.86) (0.66) (11.76) (11.62)
ln(Distance to Mine), km 3.164*** 0.0826*** 0.5849*** 4.152*** 3.395***
(6.14) (3.34) (3.69) (6.48) (32.01)
ln(Distance to Mine)^2, km 0.421*** 0.0068*** 0.0002 0.430*** 0.372***
(7.83) (2.60) (0.01) (7.10) (36.59)
ln(Natural Path), hours 0.2726*** 0.1266
(24.24) (1.42)
ln(Euclidean Distance), km 0.6392*** 0.9473***
(56.61) (10.22)
ln(Distance to East Border), km 0.0540*** 0.3026***
(11.25) (7.34)
Other variables included: Quadratic terms for agricultural potential yields of rice and marketshed fixed effects
N 23,489 23,489
R-sq 0.930
Hansen J p-value 0.0000
Kleibergen–Paap LM p-value 0.0000
Kleibergen–Paap F-stat 15.993

Note: Sample includes all non-urban cells with positive rice potential yield, according to FAO/GAEZ. Columns 1 presents coefficients from an OLS regression with ln(Rice
production) as the dependent variable. Columns 2–4 present 2SLS regressions, with the first stage for ln(cost to market) and ln(conflict fatalities) in columns 2 and 3,
respectively, and the second stage in column 4. Robust t-statistics are in parentheses. Column 5 presents spatial 2SLS estimates with bootstrapped standard errors in
parentheses. *p < 0.1, **p < 0.05, ***p < 0.01.

significantly larger than that for the local GDP regressions. There are
at least two reasons why we might expect this. First, it is possible
that the agricultural sector disproportionately benefits from reducing
transportation costs. In both regressions we are only examining rural
locations, and it may be the case that other rural industries are not as
reliant on gaining access to markets. Second, recall that the agricul-
tural models use total production in tonnes as the dependent vari-
able, while local GDP is measured in dollars. While increasing
market access may lead to a large increase in total agricultural pro-
duction, this may reduce prices, leading to a smaller, but still signif-
icant, increase in production value.
5. Estimating impacts of roads on forests
Figure 5.1 displays gridded deforestation estimates for the DRC
with roads overlaid upon the map. The figure reveals a striking pat-
tern of forest loss—deforestation has mainly occurred along the
roads in our database and declines exponentially with distance
from a road. In other cases, however, deforestation is much less
pronounced for reasons that are better captured in the regression
estimates presented below.
Drawing upon previous research, the empirical model incorpo-
rates seven critical determinants of forest clearing in road corri-
dors: road quality, distance from the road, travel cost to the
nearest market center, the agricultural opportunity value of the
land, terrain elevation, legal protection status, and the incidence
of violent conflict. To avoid spatial autocorrelation problems, the
estimates use mean pixels cleared within grid cells whose distance
from a road segment is aggregated to 2.7-km intervals on both sides
of the segment. The estimating equation is specified as:
lnðhit Þ ¼ a0 þ a1 lnðdij Þ þ a2 pi  lnðdij Þ þ a3 ln qi þ a4 lnðmi Þ
X
þ a5 lnðci Þ þ a6 lnðei Þ þ a7 lnðvi Þ þ bt yt þ it
where hit is pixel cleared in grid cell i, road segment j, year t; dij is
distance of cell i from road segment j; pi is the legal protection status
of cell i; qi is the condition of road segment j; mi is either travel cost
from cell i to the nearest urban center; ci is agricultural opportunity
value of cell i; ei the elevation of cell i; vi the conflict incidence in cell
i; yt a dummy variable with value 1 in year t and 0 otherwise; Ɛit an
error term. Precise definitions of terms are relegated to the Data Def-
inition Appendix for brevity.
All variables are calculated as centroid values for 2.7-km grid
cells.
Eqn. (5.1) is distilled from numerous experiments that tested
the interactions of distance to road with road quality, travel cost,
agricultural opportunity value, elevation, and protection status.
These revealed that road surface type has no significance for forest
clearing, controlling for road condition, so the former is excluded
from the final regressions.
Simultaneity bias may be significant in this context, since forest
clearing and road placement are jointly determined in a properly
specified spatial economic model. Hence any measure of travel cost
will be endogenous. To address estimation bias, Euclidean distance
is used as an instrumental variable.
Table 5.1 presents final estimates using several estimation tech-
niques. The first two columns present OLS results for travel cost and
Euclidean distance. Columns (3–6) present four results that employ
Euclidean distance as an instrument for travel cost: standard 2SLS,
GLS (IV) with covariance matrix adjustments for road-specific error
variances, GLS (IV) with standard errors corrected for spatial depen-
dence (Conley, 1999), and robust regression (IV). The estimated
coefficients in Table 5.1 have generally high significance, and their
signs are consistent with prior expectations. We use the Conley-
corrected GLS (IV) estimates for our discussion of results.
The most critical variable for this exercise is distance from the
road. In Table 5.1, the results for this variable are strong and consis-
ð5:1Þ tent across estimators: Ceteris paribus (in GLS (IV)), forest clearing
360 R. Damania et al. / World Development 101 (2018) 351–376
Figure 5.1. Forest clearing and road networks, 2000–2012. Source: Hansen et al. (2013) and authors’ calculations.
intensity declines 3.1% with each 10% increase in distance. The
result for protection status indicates that the relationship between
clearing intensity and distance steepens significantly in protected
areas, suggesting that protected areas in the DRC are having some
of the desired effects.
The results for road quality are also consistent across specifica-
tions, and for numerous experiments that test interactions with
distance from the road. Road surface (earth, gravel, asphalt) never
has a significant effect,14 but the impact of road condition (1 = very
poor; 2 = poor; 3 = fair; 4 = good) is large and highly significant. Nei-
ther road surface nor road condition interacts significantly with dis-
tance from the road. Among other regression variables, forest
clearing is negatively related to travel cost to the nearest market cen-
14
We have tested the effect of road surface using categorical variables as well as a
cardinal measure.
ter and elevation, and positively related to land opportunity value
and conflict intensity. As expected, the IV results for travel cost to
the nearest market differ markedly from the OLS results. The yearly
dummy variables increase steadily in size, reflecting the rise in
cumulative clearing, but the increments decrease markedly during
the period.
To illustrate the implications of these estimates we simulate the
effect of upgrading a road using parameters from the Kasese region
of the DRC. To ensure consistency with the initial pattern of defor-
estation, we form the ratio [q = (f^ )/(f^ )] and multiply by actual
1 0
clearing (f) to obtain the final prediction result [^f = qf] (where
(f^1 ),(f^o ) are predicted levels of clearing under the improved and
unimproved road respectively). Figure 5.2 presents the results for
the Kasese road segment as its condition improves from very poor
(1) to good (4). With the road in very poor condition (value 1), 34%
of previously forested land is cleared within 200 m of the road.
 R. Damania et al. / World Development 101 (2018) 351–376 361

Table 5.1
Deforestation Regression Results

(1) (2) (3) (4) (5) (6)

Dependent variable: ln(No. Pixels cleared) OLS OLS 2SLS GLS (IV) GLS (IV)(Conley)a Robust (IV)
ln(Distance from Road) 0.298*** 0.309*** 0.309*** 0.309*** 0.309*** 0.296***
(29.97) (30.43) (30.43) (8.80) (18.28) (32.77)
Protected area x ln(Distance from road) 0.165*** 0.204*** 0.204*** 0.204*** 0.204*** 0.152***
(18.56) (22.79) (22.79) (2.91) (5.94) (19.18)
Road condition 0.544*** 0.455*** 0.455*** 0.455 0.455*** 0.513***
(17.56) (13.76) (13.76) (1.57) (3.25) (17.49)
Ln(Cost to market) 0.481*** 0.952*** 0.952*** 0.952*** 0.876***
(34.15) (23.54) (3.28) (4.29) (24.39)
Euclidian distance to nearest urban center 0.279***
(23.54)
Land opportunity value 0.091*** 0.023*** 0.023*** 0.023 0.023 0.004
(10.32) (2.63) (2.63) (0.37) (0.61) (0.46)
Elevation 0.066** 0.13*** 0.13*** 0.13 0.13 0.238***
(2.06) (3.97) (3.97) (0.59) (0.71) (8.18)
Conflict intensity (1997–2007) 0.016*** 0.029*** 0.029*** 0.029 0.029*** 0.000
(5.52) (9.96) (9.96) (1.23) (3.01) (0.1)
D2002 0.935*** 0.934*** 0.934*** 0.934*** 0.934*** 0.925***
(21.93) (21.46) (21.46) (19.61) (19.65) (23.92)
D2003 1.269*** 1.269*** 1.269*** 1.269*** 1.269*** 1.246***
(29.78) (29.15) (29.15) (22.76) (23.13) (32.24)
D2004 1.559*** 1.558*** 1.558*** 1.558*** 1.558*** 1.542***
(36.58) (35.81) (35.81) (27.75) (35.00) (39.91)
D2005 1.827*** 1.826*** 1.826*** 1.826*** 1.826*** 1.81***
(42.87) (41.97) (41.97) (32.71) (35.79) (46.86)
D2006 1.983*** 1.982*** 1.982*** 1.982*** 1.982*** 1.972***
(46.56) (45.58) (45.58) (36.81) (35.41) (51.07)
D2007 2.155*** 2.154*** 2.154*** 2.154*** 2.154*** 2.145***
(50.59) (49.52) (49.52) (38.55) (39.91) (55.55)
D2008 2.278*** 2.278*** 2.278*** 2.278*** 2.278*** 2.271***
(53.50) (52.37) (52.37) (40.65) (38.87) (58.81)
D2009 2.462*** 2.462*** 2.462*** 2.462*** 2.462*** 2.456***
(57.81) (56.60) (56.60) (44.19) (43.04) (63.62)
D2010 2.651*** 2.65*** 2.65*** 2.65*** 2.65*** 2.647***
(62.25) (60.94) (60.94) (48.34) (41.58) (68.56)
D2011 2.747*** 2.746*** 2.746*** 2.746*** 2.746*** 2.738***
(64.50) (63.14) (63.14) (48.95) (40.42) (70.92)
D2012 2.832*** 2.831*** 2.831*** 2.831*** 2.831*** 2.821***
(66.48) (65.09) (65.09) (49.73) (41.06) (73.06)
Constant 4.81*** 4.806*** 6.747*** 6.747*** 6.747*** 7.255***
(23.39) (22.07) (25.94) (4.07) (4.51) (31.42)
Observations 13,758 13,758 13,758 13,758 13,758 13,758
R-squared 0.49 0.47

Note: Sample includes cells within 2.7 km of a road segment. Columns 1 and 2 present coefficients from an OLS regression with ln(No.Pixels cleared) as the dependent
variable. Columns 3–5 present 2SLS regressions, which employ Euclidean distance and NHP as instruments for travel cost: standard 2SLS, GLS (IV) with covariance matrix
adjustments for road-specific error variances, and robust regression (IV). t-statistics are in parentheses, *p < 0.10, **p < 0.05, ***p < 0.01.
a
Standard errors corrected for spatial dependency. See Conley (1999).

Figure 5.2. Effect of road quality on forest clearing intensity. Source: authors’ calculations.
362 R. Damania et al. / World Development 101 (2018) 351–376
Table 6.1
Normalized species aggregation weightsa
IUCN Code Status
CR Critically Endangered
EN Endangered
VU Vulnerable
NT Near Threatened
LC Least Concern
Rounded Weight Ratios
CR:EN
CR:VU
CR:NT
CR:LC
a
Data source: Mooers, Faith and Maddison (2008).
b
From calculations by Mooers et al., based on Isaac et al. (2007).
Further away, clearing declines to 11% at 1 km, 7% at 2 km and 2% at
10 km. With further upgrading to good condition (value 4), clearing
at the four distances increases to 91%, 30%, 19%, and 6%.
Two patterns are noteworthy in these results. First, upgrading
from very poor to good produces near-complete deforestation
within a narrow 1-km corridor straddling the road. Second, defor-
estation intensity falls rapidly as distance from the road increases.
This finding has important policy implications. If an area under
consideration is of high ecological significance, a relatively small
deviation in the location of the road (2 km–10 km) could yield sig-
nificant protective environmental benefits.
6. Gradients of biodiversity impacts
Not all forest land is of uniform ecological value, nor is it of uni-
form economic value. This section develops a variety of metrics to
identify areas that are of high ecological value and at higher risk of
degradation.15 This approach has practical policy merit. Some road
corridors will be built in areas of modest ecological concern, while
others pass through areas of higher value. If a sufficiently robust
and representative indicator of biodiversity significance is developed
it can be used to minimize ecological damage by favoring road
improvements in areas of limited consequence.
However, efforts to develop a single measure and concept of
ecological value remain elusive and beset with difficulties of enu-
meration and measurement. Nor is there a consensus in the litera-
ture on the weights that should be assigned to different sub-
components of an index. To address these issues, this study devel-
ops a composite index that encompasses the main concerns in the
literature.
Species density is clearly central to any measure of biodiversity
significance. Spatial data on distribution among species classes is
provided by IUCN and Birdlife International and summarized in
Table 6.1. The Congo Basin is distinguished by the large number
of birds and mammals that reside within its ecosystem. However,
while species density is important, it is not the only issue or indica-
tor of relevance. There are at least four other elements that are
important.
Endemism is another significant area of concern. Species that
reside in very few areas (grid cells) will be more vulnerable to extir-
pation, ceteris paribus. This is captured through an index of ende-
mism, which measures the percentage of each species’ range that
15
Spatial analysis of carbon stocks in the Congo and biodiversity habitats has largely
confirmed that there are significant overlaps: Areas that store large amounts of
biomass carbon may coincide with areas of biodiversity significance see Musampa,
Mane, Betzky, Ravilious, & Miles (2012).
Normalized Extinction Probabilities
IUCN: Future Years
Isaacb 50 100 500
1.00000 1.00000 1.00000 1.00000
0.50000 0.43299 0.66770 0.99600
0.25000 0.05155 0.10010 0.39000
0.12500 0.00412 0.01000 0.02000
0.06250 0.00005 0.00010 0.00050
2 2 1 1
4 19 10 3
8 243 100 50
16 20,000 10,000 2,000
is found in each grid cell. Total endemism for each grid cell –de-
fined as the sum of its species endemism measures—assigns higher
values to cells inhabited by species whose ranges are relatively lim-
ited. By implication, forest clearing in higher value cells may be
particularly destructive for remaining critical habitat.
Extinction risks arise for several reasons that are not captured by
the endemism measure. To incorporate these factors, the threat sta-
tus code assigned to each species by the IUCN is used with extinc-
tion probabilities using the methodology of Mooers et al. (2008).
Table 5.1 tabulates conversions from Red List codes to normalized
species weights, using four probability assignments. Three IUCN
estimates are employed to derive measures of extinction probabil-
ity over the next 50, 100, and 500 years.
Biodiversity conservation is largely about protecting the level of
genetic diversity on the planet. This suggests that a species on an
isolated branch of a phylogenetic tree is rarer and hence more
important than another with more common antecedents. Recent
work by Isaac, Turvey, Collen, Waterman, and Baillie (2007) combi-
nes the IUCN extinction risk measure with a measure of each spe-
cies’ isolation on a phylogenetic tree.16 This is yet another
indicator that is used and shown in the third column of Table 6.1.
Finally, measures based on species vulnerability alone provide
an incomplete accounting of ecological values and functions. A
comprehensive measure would need to incorporate biomes and
ecosystems. Using the World Wildlife Fund (WWF) classification
of ecoregions17 a vulnerability index is derived which measures
the amount of an eco-region in a given area. The WWF ecoregions
serve as a general proxy for distinctive plant, inspect, and animal spe-
cies that are not represented in the range maps provided by IUCN and
BirdLife International.18
Since each of these indexes measure different issues they inevi-
tably lead to very divergent ranking of priorities. Consider for
instance the data in Table 6.1. Suppose there are two areas A and
B. Area A contains 20,000 very diverse species, all in the ‘‘Least Con-
cern” category, while area B contains only 2 species, but they are
16
A phylogenetic tree is a branching tree diagram that traces the evolutionary
descent of different species from a common ancestor. Species in sparse (isolated)
branches of a phylogenetic tree are relatively unique, since they share common
descent patterns with fewer other species.
17
Defined as ‘‘a large unit of land or water containing a geographically distinct
assemblage of species, natural communities, and environmental conditions.”
18
The method for incorporating WWF ecoregions resembles this study’s treatment
of species endemism. For the group of selected countries, the percent of total area
accounted for by each ecoregion is computed. Its vulnerability index is then computed
as the inverse of its area share and the appropriate index value is assigned to each
pixel in the Congo Basin countries. This accounting assigns high values to pixels in
smaller ecoregions, where clearing single pixels may pose more significant threats to
biome integrity.
 R. Damania et al. / World Development 101 (2018) 351–376
Figure 6.1. Composite species–ecoregion index, Congo Basin countries. Source: authors’ calculations.
both ‘‘Critically Endangered Species”. Area A would receive a very
low score by the IUCN extinction risk measures, since there are
no species at ‘‘high” enough risk. But by the Isaacs measure it would
be deemed much more important since there is greater genetic
diversity of species, even when none are Critically Endangered. To
be precise, by the IUCN 50-year extinction scores, each Critically
Endangered species carries the weight of 20,000 Least Concerned
species, while by the Isaac scores each Critically Endangered spe-
cies is equivalent to 16 Least Concerned species. The differences
are thus significant.
To accommodate these diverse perspectives, a conservative
strategy is adopted whereby priority is given to the index that gen-
erates the highest threat level. This is done by normalizing the
indices for comparability using ranks measured as percentiles in
each index and selecting the maximum index (risk) value as the risk
measure for the cell. This approach gives parity to alternative vul-
nerability indicators and always picks the indicator that generates
the highest threat level.
Figure 6.1 illustrates the outcome for the Congo Basin countries.
One striking feature is the blue/green (0–50) band that arcs from
northern Cameroon to eastern DRC and back to southern DRC.
Another is the prominent clustering of very high values in western
Cameroon, along the border between Congo and the DRC, and along
the eastern margin of the Basin. And finally there are the highly vul-
nerable ‘‘red strips” that identify the habitat of Critically Endan-
gered species.19
19
Some of these are habitats for charismatic and better known species such as the
bonobo monkeys (endemic to a narrow band in the DRC), the African forest elephants,
gorillas, and chimpanzees.
363
The most important and often neglected message from this
exercise is the non-uniformity of ecological vulnerability across
forested areas. This highlights the importance of going beyond sim-
ple measurement of forest loss to an assessment of the potential
impact of that loss on biological diversity. Note, however, that the
composite species-ecoregion index grades areas by their relative
biodiversity value. However, this is not to say that the lowest
graded areas have low value on an absolute, global scale. On the
contrary, areas of relatively low value in the biodiversity-rich
Congo Basin might well be high value relative to areas in other
countries.
7. The stakes for vulnerable areas
The purpose of this section is expositional. It joins the strands of
the previous sections to show how priorities for road investment
can be established and vulnerabilities to forests and biodiversity
identified to avoid damage and conflict. The exercise entails com-
bining the estimates of the benefits of road upgrading with pre-
dicted deforestation from road upgrading and the composite
index of ecological vulnerability. The outcome is a highly varied
pattern of economic benefits, deforestation levels, and biodiversity
threats, suggesting wide scope for damage avoidance through pru-
dent planning.20
To demonstrate the approach, two simulations are described in
this section. Since the analysis is carried out a high level of spatial
20
In fact the correlation between the measures of clearing and ecological vulner-
ability is close to zero (q = 0.0356).
364 R. Damania et al. / World Development 101 (2018) 351–376

Figure 7.1. Major urban center road linking network.

of disaggregation (10 km  10 km), the simulations are illustrated
using GIS maps for expositional ease. The first simulation considers
the consequences of a project linking some of the provincial urban
centers to Kinshasa—the national capital. The second simulation at
a finer spatial scale estimates the effects of a smaller project in the
environmentally fragile northeastern part of the country, near Vir-
unga National Park.
Figure 7.1 illustrates the scope and scale of the project linking
the main provincial urban centers (capitals) to Kinshasa. This
project would involve 6,500 km of roads that traverse much of
the country, and connect many areas which are currently only
accessible by river or air travel. It is assumed that this network
would be improved from its current quality, to ‘‘good” (paved)
condition status, with several impassable missing links filled in.
The baseline scenario (current quality) has only 20% of the
network that is currently paved, and about 75% of the roads
are in poor condition.
To compute the change in GDP from the road improvement pro-
ject, the regression estimates from Table 4.1 are used in the follow-
ing formula:
DGDP i ¼ gM  siM  yi ;
where DGDPi is the total increase to local GDP in grid cell i, gM is the
local GDP elasticity of transportation costs to the local market, siM is
the percentage change in transportation costs to the local market in
cell i, and yi is baseline local GDP in cell i. The total increase in local
GDP is then obtained by summing the increase in each grid cell. The
aggregate increase in local GDP from the project linking the major
urban centers is estimated to be between US$32.70 and US$55.55
million per year, depending on whether the coefficient from
 R. Damania et al. / World Development 101 (2018) 351–376 365

Figure 7.2a and b. GDP Change and Forest Cover Loss from the Major Urban Center Road Project. Note: 7.2a (left) shows estimated changes in local GDP from the road
improvement project, and 7.2 b (right) shows estimated additional deforestation. When calculating the local GDP increase simulation, the choice of coefficient used will not
affect the figures displayed here. The map shows relative differences in local GDP. Different coefficients will change the absolute magnitude of the benefit, but not the relative
differences. Source: Authors’ calculations.

Table 4.1 column 4 (0.141) or column 5 (0.083) is used. This is a
lower bound estimate.21 In a similar manner, simulations were done
which estimate the total deforestation due to the major urban center
road improvement project. The estimates suggest that much of the
additional deforestation will occur near the major cities of Kananga,
Kisangani, Maniema, as well as South Kivu and Maniema provinces. A
comparison of GDP and forest loss is presented in the Figures 7.2a
and 7.2b.
Figure 7.3 combines these to provide a clearer visual depiction
and location of the economic and ecological impacts. Changes in
local GDP and deforestation are overlaid to identify areas which
would see the most benefits, and face the highest risks of loss.
Areas in green are ‘‘pure benefit” regions, where local GDP gains
are very significant, and deforestation increases are very low. Red
areas are the riskiest regions, which are estimated to have very
low local GDP gains, but significant deforestation as a result of
the project. These are the regions which would be most beneficial
to protect, given that there would be little loss in terms of economic
activity, and there is a significant risk to deforestation. The interme-
diate zone is in yellow.
A policy implication of this pattern of impacts is that areas of
high concern are relatively few and well defined, on the other hand
the trade-off zones and low-hazard areas seem larger, suggesting
scope for considerable win–wins for the economy and the environ-
ment. As was shown by the composite species–ecoregion index,
21
Keeping in mind that this is estimated using a partial equilibrium framework, and
that these benefits are only a subset of the total benefits to reducing transportation
costs (other benefits include those stemming from improved transport between cities,
increased access to multiple cities rather than solely the cheapest one, and better
access to ports), this estimate is likely a very conservative, minimum benefit.
not all forested areas are equally important. In order to further pri-
oritize the areas that would be in most need of protection, the
regions at risk of high deforestation are further dissected to reveal
those that have the most ecological importance. This is accom-
plished by intersecting the composite species–ecoregion index
with the simulated deforestation due to the road improvement
project. This is shown in Figure 7.4. Note that the red, high-risk
areas in Figure 7.4 are a subset of those in Figure 7.3. These red
areas represent the regions that are most important to protect,
while also having a low potential economic impact from the pro-
ject. A benefit of this exercise is that it shows that the truly
high-risk areas appear to be small when threats from the road
are considered. It also suggests where conservation efforts ought
to be directed.
To illustrate the utility of this approach at finer spatial scales
the same techniques are used to examine the costs and benefits
of a much smaller road improvement project, situated around Vir-
unga National Park. Perhaps the most notable aspect of Virunga
National Park is that it is home to the extremely rare mountain
gorillas that are listed as one of the most Critically Endangered
species in the world. The hypothetical road project would improve
a 525-km road which connects the city of Goma, situated just
south of Virunga National Park, between the park and Lake Kivu,
to Bunia, approximately 100-km north of the park, near Lake
Albert. Despite being a very populated area (approximately 4.5
million Congolese live within a small area around the road), the
current condition of the road is quite poor, and in many areas,
impassable.
The surrounding area has significant deposits of mineral wealth
including gold and the rare-earth mineral coltan. The land also
contains fertile soils, with theoretical maximum yields that are
366 R. Damania et al. / World Development 101 (2018) 351–376
Figure 7.3. Economic and Deforestation Benefit and Risk Assessment. Source: Authors’ calculations.
orders of magnitude greater than current agricultural yields. This
road thus appears to be a major candidate for significant invest-
ments to spur economic activity. Nevertheless, road infrastructure
development in this region may come with deep trade-offs. The
land around the potential road project is heavily forested, and
includes one of the world’s most important national parks. Virunga
National Park was established in 1924 and was the first designated
national park in Africa. Apart from the Critically Endangered
mountain gorillas, Virunga hosts an immense variety of endemic
biodiversity. Environmental factors aside, Virunga National Park
has the potential to become one of the greatest tourist attractions
on the continent if the conflict and security issues in eastern DRC
could be resolved. Destroying this asset could thus extinguish a
significant source of future income for the country’s impoverished
inhabitants.
Given the immense tradeoffs that come with this project, this
is an example of a project that would benefit from the analysis
developed in this report. The benefits, in terms of the increase
in local GDP, are calculated at the pixel level, and aggregated to
arrive at a final range of $5.73 million–$31.9 million per year
above the baseline, depending on whether one uses a local elastic-
ity, or the national elasticity. Figure 7.5a shows the spatial distri-
bution of these benefits. These are clustered around the road
because the local GDP increase is the intersection of the baseline
local GDP and the percentage change in transport costs, both of
which are highly clustered around the road themselves. Multiply-
ing these two together magnifies this clustering effect even
further.
Figure 7.5b shows the estimated annual deforestation that
would occur due to the road improvement project. The biggest risks
to deforestation are those regions which are nearest to the popula-
tion centers and the improved road. This simulation shows that the
areas that would be most stressed are near those near Lake Edward,
the corridor between Goma and Rutshuru, and the corridor from
Katwa, to Butembo, to Beni.
As a final point, the estimated additional deforestation due to
the project is layered on top of the current biodiversity index in
Figure 7.6, to see which threatened areas have the most biodiver-
 R. Damania et al. / World Development 101 (2018) 351–376 367

Figure 7.4. High Ecological Risk Areas from Major Urban Road Project. Source: Authors’ calculations.

sity, and are therefore worth the most to protect. The grid cells
outlined in black are those in which deforestation is predicted to
increase because of the project. Although this does not distinguish
the intensity of deforestation, it allows one to compare the gradi-
ent of biodiversity within the areas affected, to identify areas of
ecological vulnerability. It is clear that some of the regions with
the highest ecological values also coincide with the regions pre-
dicted to experience the highest rate of deforestation from the
project.
The important conclusion is that this road project poses a signif-
icant risk to the forests and to high value biodiversity in the region.
The estimates presented here suggest that a small deviation of this
road may make an immense difference in generating more eco-
nomic benefits while safeguarding vulnerable areas. This illustrates
one possible use of the approach described in the paper, which may
assist in assuring more sustainable and less environmentally dam-
aging paths to development.
8. Conclusions and discussion
Roads bring significant economic benefits and are essential for
development, especially in densely populated rural areas that are
unconnected to markets and economic activity. As a vast body of
empirical research has established, roads are often also the precur-
sors to deforestation and biodiversity loss. Conventional attempts
to resolve this dilemma have relied on reactive approaches to limit
damage. One common approach promoted by development agen-
cies and bilateral donors involves the use of ‘‘environmental safe-
guard instruments” such as the Environmental Impact
Assessment (EIA). An EIA typically seeks changes in structure and
design of infrastructure to limit the level of damage. But this
approach, while sometimes useful, has limits. Affordable alterna-
tives that prevent damage are not always available. More impor-
tantly there are concerns about the impartiality of the process.
Since EIAs are financed and managed by developers and investors,
368 R. Damania et al. / World Development 101 (2018) 351–376

Figure 7.5a and b. GDP Change and Forest Cover Loss from the Virunga National Park Road Project. Note: 7.5a (left) shows estimated changes in local GDP from the road
improvement project, and 7.5b (right) shows estimated additional deforestation. Source: Authors’ calculations.

Figure 7.6. High Ecological Risk Areas from Virunga National Park Road Project. Source: Authors’ calculations.
 R. Damania et al. / World Development 101 (2018) 351–376 369

there are fears that objectivity and impartiality of the process is A.1. Characterization of network type and terrain
compromised and rendered incentive incompatible (Wright,
Dolman, Jasny, Parsons, Schiedek, & Young, 2013). Recognizing The road network of DRC includes three classes of roads: pri-
the limits of the EIA process, governments have relied on establish- mary, secondary, and tertiary. Average vehicle speed and width of
ing protected areas to slow or limit the amount of development the main carriage road were used to characterize the differences
that can occur. This strategy too has had at best partial success. among network types as follows:
As with the EIA processes, attempts to restrict road improvements
in areas with strong economic potential tend to fail because eco-
nomic interests overwhelm the limited resources of conservation Paved Road Speed (km/h) by Network & Condition
interests. Road Condition Primary 7 m Secondary 6 m Tertiary 5 m
Experience with managing such conflicts suggests the need for
preemptive approaches that consider impacts at the very outset Flat 100 80 70
of the planning process. Drawing on a variety of disciplines—GIS, Rolling 80 70 60
econometrics, and biology—this paper suggests how a set of tools Mountainous 60 50 40
can be developed and combined to identify areas of high ecological
value and significant economic potential in order to steer develop-
ment away from ecological hotspots toward areas where net
impacts are more positive or benign. Using the DRC as an example, Unpaved Road Speed (km/h) by Network & Condition
the exercise has highlighted the importance of considering not just Road Condition Primary 7 m Secondary 6 m Tertiary 5 m
levels of forest loss but also varied biodiversity attributes to prior-
Flat 80 70 60
itize investments and areas for protection.
Rolling 60 50 40
Finally it is worth noting that this paper has purposefully
Mountainous 40 30 20
eschewed ascribing monetary values to biodiversity assets, recog-
nizing the challenges of the task and the difficulties in gaining pol-
icy acceptance of the resulting estimates. Despite considerable
where terrain type is defined using the following concepts and road
advances in implementing contingent valuation surveys, there
geometry parameters:
remains strong opposition to using estimates of the non-use bene-
 Flat. Mostly straight and gently undulating
fits of biodiversity to guide economic and infrastructure decisions.
 Rolling. Bendy and gently undulating
For instance, non-use biodiversity benefits are ignored in the recent
 Mountainous. Winding and gently undulating
Natural Capital Valuation Project citing methodological obstacles
(Khan and Johnson, 2014). Global initiatives such as the Natural
Capital Protocol also do not consider biodiversity values and
instead focus on resources (such as water) where use values can
Number
be obtained.22 Where non-use values are significant but excluded,
conventional cost-benefit assessments will be biased and inappropri- Terrain Rise & Rise & Horizontal Super_
ate for evaluating environmental trade-offs. The techniques sug- Type Fall Fall Curvature elevation
gested in this paper provide one, albeit imperfect, approach that (m/km) (#) (deg/km) (%)
circumvents the need for valuing these elusive and typically non- Flat 10 2 15 2.5
monetizable attributes. Rolling 15 2 75 3.0
Mountainous 20 3 300 5.0
Acknowledgements

We are grateful to 3 reviewers for helpful and incisive remarks. A.2. Characterization of network type and condition
The views expressed in this manuscript are those of the authors and
not the institutions to which they are affiliated. The International Roughness Index IRI (m/km) was used to
define the differences in road condition by network as follows:

Appendix A. Highway Development and Management model

Paved Road IRI (m/km) by Network & Condition
(HDM-4)
Road Condition Primary 7 m Secondary 6 m Tertiary 5 m
The Highway Development Management Model (HDM-4) con- Good 2 3 4
siders several different variables in order to estimate the cost of Fair 5 6 7
traveling along each segment of the road network. The data used Poor 8 9 10
for the estimates used in this paper was collected specifically for
DRC, to best characterize the transportation conditions one would
find there.
In order to estimate the unit cost (in ton per km), the cost of Unpaved Road IRI (m/km) by Network & Condition
transporting a vehicle with an average weight of 25 tonnes, one
Road Condition Primary 7 m Secondary 6 m Tertiary 5 m
kilometer, was first estimated. The unit cost per ton-km was
derived from the costs per vehicle using a factor of 15 ton per vehi- Good 6 8 10
cle (average net weight). This factor was obtained based on the Fair 12 13 14
assumption of a 30 ton gross vehicle weight, with a 10 ton tare Poor 16 18 20
weight and a 75% loading factor.

22
http://www.sustainablebrands.com/news_and_views/new_metrics/sustainable_ Finally, using these parameters above, a final cost per ton-km for
brands/natural_capital_protocol_will_demystify_business_value each road type is estimated ($/ton/km):
370 R. Damania et al. / World Development 101 (2018) 351–376

in Africa. One of the products of King Leopold’s ‘‘Office of Publicity” is

Paved FLAT a very detailed ‘‘Carte du Congo Belge”26 (Map of the Belgian Congo),
Road Condition Primary Secondary Tertiary which includes caravan routes and existing and projected railways
(see figure A.4). This map, which shows the transport network con-
Good 0.1174 0.1192 0.1237
structed to move slaves, ivory and mineral resources between the
Fair 0.1226 0.1264 0.1293
interior of Congo and the coastal harbors, is the main input used to
Poor 0.1286 0.1299 0.1349
construct the natural–historical instrumental variable.
Paved Rolling
The natural–historical IV is constructed by merging two sources:
Road Condition Primary Secondary Tertiary the historical caravan route map described above, and a natural
Good 0.1190 0.1191 0.1231 walking path map calculated for this study. The natural walking
Fair 0.1241 0.1268 0.1302 path, or natural path, is created by estimating the time minimizing
Poor 0.1305 0.1315 0.1367 route a pedestrian would travel over land, absent the benefits of a
Paved Mountainous road network. The subsequent section details how the natural path
network was calculated.
Road Condition Primary Secondary Tertiary
Good 0.1283 0.1292 0.1312
B.1. Natural path walking time calculation
Fair 0.1333 0.1318 0.1382
Poor 0.1410 0.1391 0.1449
The first step is creating a GIS cost surface model that accounts
Unpaved Flat
for all the traffic off-road or outside the caravan network for the
Road Condition Primary Secondary Tertiary year 1900. For that purpose, this report followed a similar approach
Good 0.1401 0.1463 0.1559 to that which was used to construct a global map of accessibility in
the World Bank’s World Development Report 2009 Reshaping Eco-
Fair 0.1622 0.1755 0.1901
Poor 0.1976 0.2133 0.2290 nomic Geography (Uchida and Nelson 2009).27 The surface model,
or off-path friction-surface raster,28 is a grid where each pixel con-
Unpaved Rolling
tains the estimated time required to cross that pixel by walking. To
Road Condition Primary Secondary Tertiary create this raster two basic layers are combined: terrain slope and
Good 0.1348 0.1453 0.1588 land cover.
Fair 0.1638 0.1771 0.1921 The slope raster was calculated from NASA’s Shuttle Radar
Poor 0.1991 0.2147 0.2305 Topography Mission (SRTM)29 Digital Elevation Models (DEMs)
Unpaved Mountainous with a resolution of 90 m. Even though the original topography
data was obtained in February 2000, it was assumed that there
Road Condition Primary Secondary Tertiary
has not been any drastic change in DRC’s terrain in the 20th cen-
Good 0.1390 0.1570 0.1806 tury. Therefore, it is safe to assume that the SRTM 90-meters data-
Fair 0.1681 0.1857 0.2091 set provides a fairly good representation of the elevation terrain
Poor 0.2014 0.2186 0.2379 circa 1900.
Land cover data is far more challenging. In the last few years,
with the surge of remote sensing technology, several land cover
Appendix B. Natural–historical path and land use datasets have been created. These high-resolution
datasets are a very accurate representation of the current state of
Since the early arrival of the Portuguese Mariner Diego Cão in physical material at the surface of the earth. However, these can-
1483, the Congolese (Kingdom of Kongo at that time) has had cul- not be used in the analysis because they are not a good represen-
tural, social and economic connections with Europe. Western reli- tation of the land cover for year 1900. Land has changed rapidly in
gions, literacy, the wheel, the plow, the gun and many other the last 100 years in DRC: deforestation, open pit mining and
technologies were quickly adopted by the Congolese (Acemoglu & urbanization in some cities have drastically transformed the sur-
Robinson, 2013).23 All these came at very large expense: one of the face. Therefore, other datasets were used. The Oak Ridge National
principally traded goods in exchange were slaves24. Laboratory (ONRL)30 has developed a Historical Land Cover and
As their contact deepened other types of goods were introduced Land Use data estimate (Klein Goldewijk, Beusen, & Janssen, 2010).
such as ivory, rubber, copper, diamonds, raffia cloth, and pottery This dataset describes historical land use changes over a 300-year
among other natural resources. The European trade was based in historical period (1700–1990) and was modeled based on a deep
the coastal cities of Sonyo and Pinda so it required an extensive understanding of the global environment, historical statistical inven-
trade network toward the eastern part of the country (primarily tories on agricultural land (census data, tax records, land surveys,
near present day Kivu and Katanga provinces) where much of the etc), and different spatial analysis techniques. A shortcoming of this
mineral deposits and other natural resources were mined. Fueled dataset is that the resolution is approximately 55 km per cell, mak-
by the industrial revolution and new inventions such as the inflat- ing a clear tradeoff between space (resolution) and time (representa-
able rubber tubes, the demand for goods increased dramatically.25 tive for 1900). Given the importance of obtaining an accurate picture
By the end of the 19th century the Congo was a personal possession
of King Leopold II (not an official Belgian Colony). The king was 26
Carte du Congo Belge / éditée par l’Office de Publicité, anciens établissements J.
engaged in a vigorous publicity campaign aimed at convincing the Lebègue & Cie. - Éditeurs, Bruxelles (1896). Stored at the Library of Congress and
other European powers to recognize the legitimacy of his rule, a downloaded from http://www.wdl.org/en/item/59/
27
Uchida, H. and Nelson, A. Agglomeration Index: Toward a New Measure of Urban
difficult task in view of the notorious brutality of his administration
Concentration. Background paper for the World Bank’s World Development Report
2009.
28
A raster is a geographic map with information (e.g., elevation, landcover) in a
matrix of pixels.
23 29
Why Nations Fail. Acemoglu and Robinson (2013). http://www2.jpl.nasa.gov/srtm/
24 30
‘‘The wealth of Africa, The kingdom of Kongo”. The British Museum 2011. ORNL is a multiprogram science and technology laboratory managed for the U.S
25
Congo Free State, 1885–1908 (http://www.yale.edu/gsp/colonial/belgian_congo/). Department of Energy by UT-Battelle,LLC.
 R. Damania et al. / World Development 101 (2018) 351–376 371

Figure A.1. Terrain roughness and land cover circa 1900. Source: Authors’ calculations using NASA and ORNL.

Figure A.2. Walking time in DRC given land topography (hours per pixel). Source: Authors’ calculations.

of the historical land cover, this low resolution, but better account of
the land surface types circa year 1900 was chosen (i.e., ORNL Histor-
ical Land Cover) over the better resolution but newer data. Figure A.1
displays the terrain roughness (left) and land cover (right) for DRC,
circa 1900.
The off-path friction-surface raster is created by combining the
land topography raster and the land cover map. This is based on
the guiding assumption that all travel in 1900 was on foot and
walking speed is therefore determined by the land cover class
and slope. The typical velocity of a hiker when walking on uneven
or unstable terrain is 1 h for every 4 km (4 km/h) and diminishes on
steeper terrain. A hiking velocity equation31 (Tobler, 1993) was used
to reflect changes in travel speed as a function of trail slope:
W = 6 * exp(3.5 * |S + 0.05|)where W is the hiking velocity in
km/h and S is the slope or gradient.
By applying the speed formula, he time it required to cross 1
pixel (92.5 m) was computed. In this way, the time (hours) that it
31
‘‘Three presentations on geographical analysis and modeling non-isotropic
geographic modeling speculations on the geometry of geography global spatial
analysis”. National Center for Geographic Information and Analysis. Technical Report
93–1. February 1993.
372 R. Damania et al. / World Development 101 (2018) 351–376

Figure A.3. Final natural–historical path raster (hours per pixel). Source: Authors’ calculations.

Figure A.4. DRC historic trade routes circa 1896 and digitally manipulated map with routes. Source: Carte du Congo Belge/éditée par l’Office de Publicité, anciens
établissements J. Lebègue & Cie. - Éditeurs, Bruxelles (1896).
 R. Damania et al. / World Development 101 (2018) 351–376 373

Figure A.5. Historical caravan route shapefile. Source: Authors’ calculations.

takes to walk through any pixel— only taking into account the Source: Own calculations based on Uchida, H. and Nelson, A. (2009).
topography—was calculated, as shown below in Figure A.2. Note Lastly, walking travel speed (slope variable) was multiplied by
that the more mountainous regions of DRC near the Kivu provinces the delay factor (land cover variable) to obtain the off-path
in the east have significantly higher walking times Figure A.3. friction-surface raster that models the time that it takes to walk
Next, a delay factor to account for effect of walking through dif- 92.5 m anywhere in DRC circa 1900.
ferent land classes was estimated. The historical land cover raster
resolution was changed from half degree to 90 m and each class B.2. Historical path creation
was assigned a speed reducing factors according to the following
table: The second step was to digitalize a historical map of DRC to cre-
ate shapefile that could be added as a layer for spatial analysis. A
Class # Biome Type Delay Factor mix of image manipulator (open source GIMP—http://www.gimp.
0 Oceans/Water N/A org/) and GIS software (ESRI’s ArcGis Desktop) were used to sepa-
1 Cultivated land 1.00 rate the routes from other map features and then digitize the
2 Pasture/land used for grazing 1.00 map. Figure A.4 shows the historical map which was then con-
5 Ice 1.33 verted into the shapefile shown in Figure A.5.
6 Tundra 1.00 Then the newly created shapefile was converted into a raster
7 Wooded tundra 1.00 with a resolution of 92.5 m to match that of the natural path
8 Boreal forest 1.17 friction-surface raster. The pixel value assigned to every cell where
9 Cool conifer forest 1.00 there is a caravan route passing through is approximately 0.02 h or
10 Temperate mixed forest 1.17 1.2 min. This was arrived at by assuming the caravan route travel
11 Temperate deciduous forest 1.33 speed at 5 km/h32; equivalent to the human average walking speed
12 Warm mixed forest 1.17 on a stable terrain.
13 Grassland/Steppe 1.00
14 Hot desert 1.00 B.3. Cost-distance function: calculating travel time
15 Scrubland 1.00
16 Savanna 1.00 The third step was to merge the off-path and the caravan route
17 Tropical woodland 1.33 friction surfaces. ArcGIS Desktop’s tool MERGE was used to com-
18 Tropical forest 1.67 bine the two rasters into a single one where the order of the input
19 No data over land (e.g., Antarctica) N/A defines the order of precedence, in this case the caravan routes

32
http://www.princeton.edu/achaney/tmve/wiki100k/docs/Walking.html
374 R. Damania et al. / World Development 101 (2018) 351–376
Figure A.6. Travel time to Kinshasa in 1900. Source: Authors’ calculations.
overlay the off-path walking. Then the friction surface was obtained
to model the time that it takes to move around the entirety of DRC
around the year 1900, taking into account terrain, land cover type,
and transport infrastructure.
To create the final variable, which was used as an instrumental
variable in this study, the time that it takes to travel on foot from
each pixel in the study area to different selected cities or target des-
tinations, was estimated. ArcGIS Cost distance tools were used to
calculate, for each pixel, the least cumulative amount of time it
takes to walk to a specified locations (market). The algorithm uti-
lizes the node/link cell representation, whereby the center of each
cell is considered a node and each node is connected to its adjacent
nodes by multiple links. Every link has an impedance derived from
the costs (measured in units of time) associated with the cells from
the natural path friction cost surface and from the direction of
movement through the cells. See Figure A.6 for an example of a ras-
ter measuring travel time from each point to Kinshasa.
The creation of a least cumulative cost raster was replicated for
each of DRC’s 57 selected cities and then cell values from the travel
time raster at SPAM locations was retrieved. As a result an origin/
destination travel time matrix of 27,500 rows (number of pixels
in DRC) and 57 columns (selected cities) is obtained. Finally, this
dataset was compared with the current travel cost dataset, and
the appropriate city for each pixel was selected for the econometric
model.
B.4. Data definitions
Hansen pixels cleared: per 2.7 km grid cell, the number of 30 m
pixels identified by Hansen et al. (2013) as cleared, by year, for
2000–12.
Distance from road segment: distance from the centroid of
each grid cell to the nearest road, calculated in ArcGIS 10.
Legal protection status: 1 if the parcel is in a protected area
identified by the World Database on Protected Areas (WDPA); 0
otherwise. The WDPA shapefile has been downloaded from
http://www.protectedplanet.net/.
Condition of the road segment: Surface types are earth, gravel
and asphalt. Road conditions are identified as good, fair, poor and
very poor. We have translated each variable into ordered cardinal
values for estimation: Surface: earth (1), gravel (2), asphalt (3);
Condition: very poor (1), poor (2), fair (3), good (4).
Travel cost: cost from a grid cell’s mean point to the nearest
urban center with a population of 50,000 or greater. Raster resolu-
tion: 0.0083 decimal degrees.
Agricultural opportunity value: mean value for a grid cell, cal-
culated from the high-resolution global grid developed by Deveny
et al. (2009). Raster resolution: 0.0025 decimal degrees.
Elevation: Average elevation for a grid cell, calculated from the
CGIAR-SRTM dataset (3 s resolution), aggregated to 30 s resolution
by DIVA-GIS (http://www.diva-gis.org/gdata).
Conflict incidence: Armed conflict fatalities per unit area,
1997–2007, calculated by Ali et al. (2015) at 0.017 decimal degrees
resolution from data in the Armed Conflict Location Events Dataset
(ACLED) (Raleigh et al., 2010).
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