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The impact of institutions on forestland transfer rents: The case of Zhejiang province in China

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  • Xu, Chang
  • Li, Lingchao
  • Cheng, Baodong

Abstract

Since initiating the new round of collective forest tenure reform in China, the development of the forestland transfer market has been of considerable interest to the academic and policy communities. Our theoretical analysis posited that formal institutions—tenure certificate and written contract—are positively associated with the rents, while informal institutions, as reflected in the social relationships, can reduce transfer rents. Based on a spatial econometric model and survey data from four cities in Zhejiang, our empirical results show that in addition to the formal institutions, the informal institutions have played a key role in facilitating the transfers and determining the rents. The rent between acquaintances is lower than those between strangers. Mutual trust between acquaintances has not only alleviated farmers' dependence on tenure certificates, but also served as a guarantee for fulfilling the contractual terms. Nonetheless, China's forestland transfer market is not well developed yet. More efforts are needed to strengthen the formal institutions and improve the policy setting in facilitating farmers' participation in forestland transfers. China's experience is relevant to many developing and emerging economics.

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  • Xu, Chang & Li, Lingchao & Cheng, Baodong, 2021. "The impact of institutions on forestland transfer rents: The case of Zhejiang province in China," Forest Policy and Economics, Elsevier, vol. 123(C).
    • Handle: RePEc:eee:forpol:v:123:y:2021:i:c:s1389934120306808
    DOI: 10.1016/j.forpol.2020.102354
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    Cited by:

    1. Jinna Yu & Yiming Wei & Wei Fang & Zhen Liu & Yujie Zhang & Jing Lan, 2021. "New Round of Collective Forest Rights Reform, Forestland Transfer and Household Production Efficiency," Land, MDPI, vol. 10(9), pages 1-22, September.
    2. Xu, Chang & Lin, Fanli & Li, Chaozhu & Cheng, Baodong, 2022. "Effects of designating non-public forests for ecological purposes on farmer's forestland investment: A quasi-experiment in southern China," Forest Policy and Economics, Elsevier, vol. 143(C).
    3. Ranjan, Pranay & Arbuckle, J. Gordon & Church, Sarah P. & Eanes, Francis R. & Floress, Kristin & Gao, Yuling & Gramig, Benjamin M. & Singh, Ajay S. & Prokopy, Linda S., 2022. "Understanding the relationship between land tenure and conservation behavior: Recommendations for social science research," Land Use Policy, Elsevier, vol. 120(C).
    4. Yuge Wang & Apurbo Sarkar & Min Li & Zehui Chen & Ahmed Khairul Hasan & Quanxing Meng & Md. Shakhawat Hossain & Md. Ashfikur Rahman, 2022. "Evaluating the Impact of Forest Tenure Reform on Farmers’ Investment in Public Welfare Forest Areas: A Case Study of Gansu Province, China," Land, MDPI, vol. 11(5), pages 1-17, May.
    5. Juan Wu & Wenjing Yu & Xiaobing Liu & Yali Wen, 2022. "Analysis of Influencing Factors and Income Effect of Heterogeneous Agricultural Households’ Forestland Transfer," Land, MDPI, vol. 11(9), pages 1-17, September.

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