Paved to Nowhere: Dubious Payoffs of Rural Road Expansion in Nepal’s Rugged Terrain

We reexamine whether the economic benefits commonly attributed to rural road expansion hold in Nepal’s transforming economy and investigate an important environmental externality. Across a broad set of plot- and household-level outcomes, we find little systematic evidence that better road access enhances economic outcomes. These null results persist across alternative specifications and geographical subsamples. In contrast, ward-level estimates reveal that the expansion of earthen (motorable) roads between 2016 and 2018 is associated with a significant increase in landslide-affected areas, whereas blacktop roads exhibit no detectable effect. The combination of muted economic impacts and heightened environmental risk—set against a backdrop of rapid out-migration and declining agricultural engagement—suggests that recent patterns of rural road proliferation in Nepal’s Hill region may yield low or even negative net returns. The findings underscore the importance of context-specific infrastructure planning that accounts for demographic change, market conditions, and topographic fragility.