Roads

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Outside the highly urbanized cities, the road system in the country is

generally poor. Considering only the concrete roads, regarded as superior

in quality to gravel, paved or asphalted roads, the average road density is

0.72 km per square km. Some provinces, especially those that have large

mountainous areas (such as Ifugao), have very few concrete roads.

The simulated intervention increases the road density to 1 km per square

km, but only in provinces where the current road density is less than 1 km.

The simulated road project will increase the average road density to 1.58

km per square km. Assuming a cost of Pesos 1 million per km of concrete

road, the total project cost is Pesos 280 billion. We also assume annual

maintenance costs of 5 per cent of total project cost, and an economic life

of 15 years.9

Overall benefi t is estimated to be Pesos 170 billion, but total benefi t to

the poor is negative. Note that in the model, the direct impact of roads on

the four poorest quintiles is negative. However, due to the indirect effects

through economic growth created by road investment, poverty incidence

is still estimated to decrease by 0.03 percentage points. The benefi t–cost

ratio is equal to 2.7.