| Summary: | This paper develops and applies a spatial econometric model that links road upgrading to forest clearing and biodiversity loss in the Lao People's Democratic Republic. The paper uses 500-meter cells to estimate the relationship between the rate of forest clearing in a cell and its distance to the closest point on the nearest road link, the quality of that link, the cell's legal protection status, transport cost to the nearest urban center, the agricultural opportunity value of the land, and terrain elevation. The parameter estimates are all robust, with the expected signs and very high statistical significance. The paper highlights the results that measure the impact of improved road quality on forest clearing through shorter transport times to market and lower vehicle maintenance costs. The estimated response parameters and a composite biodiversity indicator are used to compute an index of expected biodiversity loss from road upgrading in each 500meter cell. The results identify areas in the Lao People's Democratic Republic where high expected biodiversity loss may warrant additional protection as road upgrading continues. This analysis will help policy makers in the country to weigh context-specific trade-offs between development and conservation objectives associated with road improvement
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