complex mosaics of land use and land cover areas, forests and urban fringes where the boundaries between forest and non-forest areas were not clear.

We also conducted accuracy assessment for each individual image using the maximum likelihood method. In order to assess classification accuracy, we generated contingency matrices and the corresponding Kappa statistics. Kappa values quantify how much better a particular classification is in comparison to a random classification, making it possible to calculate a confidence interval for comparing two or more classifications. In addition we also assess procedural accuracy to measure the percentage of pixels of a given land cover type that is correctly classified. User accuracy is generated to measure the commission errors useful for examining whether or not a pixel classified into a given class actually represents that class on the ground. We used a subjective scale in accuracy assessment and found Kappa values greater than 80 percent for all the images.<sup>12</sup> After checking their accuracies, all individual images are subset to the actual classified areas and mosaics made to the base images to cover the entire study area. These mosaic images are re-sampled to 60m x 60m to bring them to the same resolution. For example, all MSS images are upgraded to 60m x 60m from 80m x 80m, while the TM and ETM+ images are degraded to 60m x 60m from 28.5m x 28.5 m. The decision to resample the images into 60m x 60m was made only after ensuring that no significant information would be lost during the exercise. After these re-samplings, the land use and land cover classes were generated by overlaying the village development committee (VDC)<sup>13</sup> polygons. All road lengths were calculated in meters for each individual VDC. These road lengths were calculated by using the Spatial Analyst Zonal method.

# **4.2 Household Survey Data**

The primary economic data we use come from a repeated cross-section of the Nepal Living Standards Survey (NLSS) which is a nationally-representative survey of households and communities conducted by the Nepal Central Bureau of Statistics with assistance from the World Bank. The first round of the household survey, NLSS-I covered 3,373 households in 274 wards sampled from four geographic and ecological strata: Mountains, Urban Hills, Rural Hills and Terai. Between 12 and 16 households were interviewed in each ward between June 1995 and May 1996.

The NLSS-II, on the other hand, was conducted between April 2003 and April 2004 and its cross-sectional sample was constructed using a stratified design similar to NLSS-I. It covered 73 districts of Nepal (excluding the Rasuwa and Mustang districts) and enumerated 3912 households in 326 wards. Both rounds collected detailed information on household consumption of a wide range of food and non-food items, data on socio-demographic composition of the interviewed households, labor status of household members, health and educational status, information on various sources

> 12Kappa values in this range are considered ‘excellent’.(Monserud and Leemans (1992))

> 13Village Development Committee is administrative name for villages in Nepal

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