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HEDONIC APPROACHES TO ESTIMATING IMPACTS 23


Table 4.1 Estimating the impact of access to rural infrastructure and extension services in Nepal using a Hedonic approach, 1996–2003


Plot value,


Variable 1996 Ln travel time in hours Ln plot size in hectares


Lowland plot (1 = Yes) Seasonal plot (1 = Yes) Year-round plot (1 = Yes) Irrigation (1 = Yes) Extension visit received (1 = Yes) Ln killings per district (2000–02)


Constant 10.25*** (0.134)


Observations 9,676 R-squared 0.557


–0.261*** (0.055)


0.530*** (0.027)


0.208*** (0.053)


0.266*** (0.073)


0.445*** (0.086) 0.143** (0.069) 0.042


(0.079)


Plot value, 2003


–0.471*** (0.045)


0.660*** (0.022)


0.288*** (0.047) 0.147** (0.066)


0.212*** (0.071)


0.196*** (0.068) 0.085* (0.044) 0.052


12.49*** (0.210)


8,668 0.603


Source: Authors’ calculations. Notes: Robust standard errors are in parentheses. District fixed effects are included. Ln means log normal; *** means p < 0.01; ** means p < 0.05; * means p < 0.1.


impact of roads, because many households do not own land in Nepal, so these impacts apply conditionally only to landholders. These effects, although high with respect to land, may not transfer one to one into increases in household welfare, because land is an illiquid asset whose stream of income may be dif- ficult to realize given the financial market underdevelopment in rural areas and incomplete land markets.


Access to irrigation also has potentially large effects on land value. We consider the effect of irrigation on land values, defining irrigation as canal irrigation that is primarily constructed for use by multiple farmers in commu- nity associations or cooperatives and tubewell irrigation as that individually allocated to a particular farmer on a particular plot. In Table 4.1, we see a positive, statistically significant increase in the effect of irrigation in 1995/96 and 2003/04 of 5.3 percentage points. The increase in the effect of irriga- tion suggests that the impact of access to irrigation was increasing over this time period, although we cannot test this formally. This could have been due


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