New road construction is widely seen to aid economic development. New roads have also been shown to increase deforestation, suggesting development-environment tradeoffs for the locations where studies have focused to date. Yet in other settings, multiple mechanisms could support the opposite road-forest relationship, alleviating this tradeoff. New roads could lower deforestation or promote reforestation by: (1) raising the relative productivity of labor in non-agricultural sectors, thereby reducing agricultural activity; (2) facilitating price convergence across regional forest-product markets, raising profits from forest management or plantations; and (3) encouraging substitution from locally collected fuelwood to other energy sources.
India’s Rural Roads Program offers an opportunity to explore these hypotheses in a large country with little previous investigation of the road-forest relationship. Program rules prioritized construction by village population ranges, which differentiated construction timing across villages. The author exploits this with a generalized difference-in-differences estimation strategy, having combined satellite, survey and census data to create a village-level, countrywide panel for 2000-2014. As a robustness check, the author instruments for road construction in a cross section regression using the discrete thresholds between population ranges. For India as a whole, it is found that road construction contributed to tree cover expansion, in great contrast to the existing empirical road-forest literature. Further, considerable variation is demonstrated in road impacts across economic settings within India: frontier settings saw reductions in tree cover due to new roads, while less isolated settings with more agricultural development saw increases in tree cover. These results inform the spatial targeting of roads, while broadening the set of mechanisms used to explain forest transitions (the reversal of forest cover loss).