Using Satellite Imagery to Detect the Impacts of New Highways: An Application to India

This paper integrates daytime and nighttime satellite imagery into a spatial general-equilibrium model to evaluate the returns to investments in new motorways. Our approach has particular value in developing-country settings in which spatially granular economic data are scarce. To demonstrate our method, we use publicly available imagery to evaluate India’s road construction projects in the early 2000s. Estimating the model and evaluating welfare impacts only requires remotely-sensed data. We find that India’s road investments improved aggregate welfare, particularly for the largest and smallest urban markets. Most welfare gains accrued within Indian districts—the unit of analysis in conventional approaches—which demonstrates the benefits of using of high-resolution satellite imagery.