Abstract
Developing transport infrastructure must involve a comprehensive cost-benefit analysis, and accounting for environmental quality changes associated with such an infrastructure is one important aspect that can help complete this problem. In this study, we used difference-in-difference to estimate coastal water quality changes, measured by the Chlorophyll-a concentration, related to port development in Indonesia over the last decade. Using unique MODIS-derived monthly water quality data, we found that the presence of a local small port causes a 1.7% increase in Chlorophyll-a in coastal areas within 6 km of the port. The effects are concentrated in the first two months of operation, and there is also evidence for anticipation effects associated with the construction period. We found a greater effect in Indonesia's eastern regions, which rely on small ports for their local activities. Furthermore, we argue that the effect can be substantial in a larger port, despite posing a limited risk on marine pollution.
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