In many south american countries, such as ecuador, peru, and bolivia, rural development has been held back by a lack of accessibility to many potentially rich agricultural areas. As a result, these areas are now being used for subsistence farming only rather than for more mechanized farms that could produce substantial amounts of agricultural surplus. It is apparent that road improvement could increase agricultural production and substantially reduce the user costs because the better road surfaces would encourage the use of motorized vehicles rather than animals or river boats. The better economic returns possible from the existing land would lead to an increase in the area under cultivation and eliminate the potential loss from crop deterioration resulting from a lack of access during harvest season or damage to fragile crops because of rough road surfaces. The economic analysis requires not only a determination of the costs and benefits, but an evaluation of such economic indicators as net present value, first year rate of return or internal rate of return, and optimum schedule for construction. The economic indicators, when evaluated jointly with such social factors as population density and level of education, are used to predetermine both the socioeconomic justification and the priorities for rural road construction. This paper appears in transportation research record no. 1229, Economics, finance, planning, and administration.
Abstract