Output- and Performance-Based Road Contracts and Agricultural Production: Evidence from Zambia

Abstract

Rural access is among the most important infrastructure elements to stimulate economic growth in rural and remote areas. The sustainability of feeder road maintenance is a challenge in many developing countries. Many feeder roads are unpaved and need to be maintained frequently, but they are often neglected under budget pressure. Output- and performance-based road contracts are an instrument to ensure the sustainability of road maintenance. Contractors are required not only to improve roads, but also to maintain them. Using micro data from household surveys in Zambia, the paper examines the impacts of output- and performance-based road contracts on agricultural production. It shows that the contracts have a significant impact on crop production, especially maize and groundnuts, two major crops grown in the study area. The paper also finds that the measured impacts are associated with actual road maintenance works, regardless of contractual methods. Any road work can improve people's connectivity, even if it is not an output- and performance-based road contracts. The impact of the contracts is catalytic: more road works were implemented on contract roads than non-contract roads, holding everything else constant. This is an important contribution to the sustainability of road maintenance. Finally, road improvement works are found to facilitate farmers' market participation, but the impact seems weak. There may be other constraints. Transport service costs are found to have a negative impact on farmers' market sales. Thus, although roads are improved, transport services may be not available or too expensive, which still hamper farmers' market participation.

Keywords: Agricultural Economics, Transport Economics Policy & Planning