IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v12y2020i4p1492-d321556.html
   My bibliography  Save this article

Long-Term Impact of China’s Returning Farmland to Forest Program on Rural Economic Development

Author

Listed:
  • Yuchen Gao

    (School of Economics and Management, Tsinghua University, Beijing 100084, China)

  • Zehao Liu

    (School of Finance, Renmin University of China, Beijing 100872, China)

  • Ruipeng Li

    (School of Finance & Investment, Guangdong University of Finance, Guangzhou 510521, China
    International School of Business & Finance, Sun Yat-sen University, Zhuhai 519000, China)

  • Zhidan Shi

    (School of Public Policy and Management, Tsinghua University, Beijing 100084, China)

Abstract

The Returning Farmland to Forest Program (RFFP) is widely known as one of China’s largest and most successful payment schemes for ecosystem service projects for the achievement of both environmental and economic sustainability. By sponsoring afforestation activities and compensating farmers for converting cropland to forest, the project was designed to achieve multiple goals. Ecologically, the program aims to expand forest cover and to reduce flood and soil erosion. Economically, it aims to alleviate poverty and improve rural livelihoods. Although the official metrics indicate successful program outcomes in the short term, researchers have reported mixed and controversial results for long-term outcomes. We combined the difference-in-difference (DID) with instrumental variables (IVs) regression to examine the long-term effects of China’s RFFP on local economic development. We found that (1) the RFFP has had a remarkably positive impact on local economic growth in the primary sector, but considerably limits the growth of enterprises above a designated size by 16.8%; (2) the RFFP is unable to promote the development of the secondary industry because it cannot effectively promote the transfer of rural laborers to the secondary industry sector; and (3) in addition to increasing the general budgetary expenditure of local finance by 7.50%, this program has significantly reduced local fiscal revenue by 35.50%. We suggest that eco-compensation should consider the performance of the RFFP in its evaluation criteria.

Suggested Citation

  • Yuchen Gao & Zehao Liu & Ruipeng Li & Zhidan Shi, 2020. "Long-Term Impact of China’s Returning Farmland to Forest Program on Rural Economic Development," Sustainability, MDPI, vol. 12(4), pages 1-17, February.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:4:p:1492-:d:321556
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/12/4/1492/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/12/4/1492/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Liu, Zhen & Lan, Jing, 2015. "The Sloping Land Conversion Program in China: Effect on the Livelihood Diversification of Rural Households," World Development, Elsevier, vol. 70(C), pages 147-161.
    2. Guo, Huanhuan & Li, Bo & Hou, Ying & Lu, Shubing & Nan, Bo, 2014. "Rural households' willingness to participate in the Grain for Green program again: A case study of Zhungeer, China," Forest Policy and Economics, Elsevier, vol. 44(C), pages 42-49.
    3. Lechner, Michael, 2011. "The Estimation of Causal Effects by Difference-in-Difference Methods," Foundations and Trends(R) in Econometrics, now publishers, vol. 4(3), pages 165-224, November.
    4. Bennett, Michael T., 2008. "China's sloping land conversion program: Institutional innovation or business as usual?," Ecological Economics, Elsevier, vol. 65(4), pages 699-711, May.
    5. Petra Moser & Alessandra Voena, 2012. "Compulsory Licensing: Evidence from the Trading with the Enemy Act," American Economic Review, American Economic Association, vol. 102(1), pages 396-427, February.
    6. Emi Uchida & Scott Rozelle & Jintao Xu, 2009. "Conservation Payments, Liquidity Constraints, and Off-Farm Labor: Impact of the Grain-for-Green Program on Rural Households in China," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 70-86.
    7. Minjuan Zhao & Runsheng Yin & Liuyang Yao & Tao Xu, 2015. "Assessing the impact of China’s sloping land conversion program on household production efficiency under spatial heterogeneity and output diversification," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 7(2), pages 221-239, May.
    8. Emi Uchida & Jintao Xu & Scott Rozelle, 2005. "Grain for Green: Cost-Effectiveness and Sustainability of China’s Conservation Set-Aside Program," Land Economics, University of Wisconsin Press, vol. 81(2).
    9. Kelly, Peter & Huo, Xuexi, 2013. "Land Retirement and Nonfarm Labor Market Participation: An Analysis of China’s Sloping Land Conversion Program," World Development, Elsevier, vol. 48(C), pages 156-169.
    10. Cheng Chen & Hannes J. König & Bettina Matzdorf & Lin Zhen, 2015. "The Institutional Challenges of Payment for Ecosystem Service Program in China: A Review of the Effectiveness and Implementation of Sloping Land Conversion Program," Sustainability, MDPI, vol. 7(5), pages 1-28, May.
    11. Yin, Runsheng & Zhao, Minjuan, 2012. "Ecological restoration programs and payments for ecosystem services as integrated biophysical and socioeconomic processes—China's experience as an example," Ecological Economics, Elsevier, vol. 73(C), pages 56-65.
    12. Ping Qin & Fredrik Carlsson & Jintao Xu, 2011. "Forest Tenure Reform in China: A Choice Experiment on Farmers’ Property Rights Preferences," Land Economics, University of Wisconsin Press, vol. 87(3), pages 473-487.
    13. Lunyu Xie & Bohan Zeng & Li Jiang & Jintao Xu, 2018. "Conservation Payments, Off-Farm Labor, and Ethnic Minorities: Participation and Impact of the Grain for Green Program in China," Sustainability, MDPI, vol. 10(4), pages 1-18, April.
    14. Uchida, Emi & Xu, Jintao & Xu, Zhigang & Rozelle, Scott, 2007. "Are the poor benefiting from China's land conservation program?," Environment and Development Economics, Cambridge University Press, vol. 12(4), pages 593-620, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yushan Yang & Nuoya Gong & Keying Xie & Qingfei Liu, 2022. "Predicting Gasoline Vehicle Fuel Consumption in Energy and Environmental Impact Based on Machine Learning and Multidimensional Big Data," Energies, MDPI, vol. 15(5), pages 1-17, February.
    2. Yirui Han & Qinqin Pan & Yuee Cao & Jianhong Zhang & Jiaxuan Yuan & Borui Li & Saiqiang Li & Renfeng Ma & Xu Luo & Longbin Sha & Xiaodong Yang, 2022. "Estimation of Grain Crop Yields after Returning the Illegal Nurseries and Orchards to Cultivated Land in the Yangtze River Delta Region," Land, MDPI, vol. 11(11), pages 1-19, November.
    3. Zhen Liu, 2022. "Rural Population Decline, Cultivated Land Expansion, and the Role of Land Transfers in the Farming-Pastoral Ecotone: A Case Study of Taibus, China," Land, MDPI, vol. 11(2), pages 1-17, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lu, Gang & Yin, Runsheng, 2020. "Evaluating the Evaluated Socioeconomic Impacts of China's Sloping Land Conversion Program," Ecological Economics, Elsevier, vol. 177(C).
    2. Chen, Cheng & Matzdorf, Bettina & Meyer, Claas & König, Hannes & Zhen, Lin, 2018. "How socioeconomic and institutional conditions at the household level shape the environmental effectiveness of governmental PES: China’s Sloping Land Conversion Program," SocArXiv jzvqh, Center for Open Science.
    3. Cheng Chen & Hannes J. König & Bettina Matzdorf & Lin Zhen, 2015. "The Institutional Challenges of Payment for Ecosystem Service Program in China: A Review of the Effectiveness and Implementation of Sloping Land Conversion Program," Sustainability, MDPI, vol. 7(5), pages 1-28, May.
    4. Zhen Liu & Arne Henningsen, 2016. "The effects of China's Sloping Land Conversion Program on agricultural households," Agricultural Economics, International Association of Agricultural Economists, vol. 47(3), pages 295-307, May.
    5. Wang, Ying & Zhang, Qi & Bilsborrow, Richard & Tao, Shiqi & Chen, Xiaodong & Sullivan-Wiley, Kira & Huang, Qingfeng & Li, Jiangfeng & Song, Conghe, 2020. "Effects of payments for ecosystem services programs in China on rural household labor allocation and land use: Identifying complex pathways," Land Use Policy, Elsevier, vol. 99(C).
    6. Wu, Xutong & Wang, Shuai & Fu, Bojie & Zhao, Yan & Wei, Yongping, 2019. "Pathways from payments for ecosystem services program to socioeconomic outcomes," Ecosystem Services, Elsevier, vol. 39(C).
    7. Liu, Ping & Yin, Runsheng & Zhao, Minjuan, 2019. "Reformulating China's ecological restoration policies: What can be learned from comparing Chinese and American experiences?," Forest Policy and Economics, Elsevier, vol. 98(C), pages 54-61.
    8. Linjing Ren & Jie Li & Cong Li & Shuzhuo Li & Gretchen C. Daily, 2018. "Does Poverty Matter in Payment for Ecosystem Services Program? Participation in the New Stage Sloping Land Conversion Program," Sustainability, MDPI, vol. 10(6), pages 1-27, June.
    9. Li, Lingchao & Liu, Can & Liu, Jinlong & Cheng, Baodong, 2021. "Has the Sloping Land Conversion Program in China impacted the income and employment of rural households?," Land Use Policy, Elsevier, vol. 109(C).
    10. repec:gat:wpaper:1509 is not listed on IDEAS
    11. Sylvie Démurger & Haiyuan Wan, 2012. "Payments for ecological restoration and internal migration in China: the sloping land conversion program in Ningxia," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-22, December.
    12. Li, Hua & Yao, Shunbo & Yin, Runsheng & Liu, Guangquan, 2015. "Assessing the decadal impact of China's sloping land conversion program on household income under enrollment and earning differentiation," Forest Policy and Economics, Elsevier, vol. 61(C), pages 95-103.
    13. Sylvie Démurger, 2011. "Payments for ecological restoration and rural labor migration in China: The Sloping Land Conversion Program in Ningxia," Post-Print halshs-00673808, HAL.
    14. Démurger, Sylvie & Pelletier, Adeline, 2015. "Volunteer and satisfied? Rural households' participation in a payments for environmental services programme in Inner Mongolia," Ecological Economics, Elsevier, vol. 116(C), pages 25-33.
    15. Lunyu Xie & Bohan Zeng & Li Jiang & Jintao Xu, 2018. "Conservation Payments, Off-Farm Labor, and Ethnic Minorities: Participation and Impact of the Grain for Green Program in China," Sustainability, MDPI, vol. 10(4), pages 1-18, April.
    16. Hao Li & Michael T Bennett & Xuemei Jiang & Kebin Zhang & Xiaohui Yang, 2017. "Rural Household Preferences for Active Participation in “Payment for Ecosystem Service” Programs: A Case in the Miyun Reservoir Catchment, China," PLOS ONE, Public Library of Science, vol. 12(1), pages 1-21, January.
    17. Qu, Futian & Kuyvenhoven, Arie & Shi, Xiaoping & Heerink, Nico, 2011. "Sustainable natural resource use in rural China: Recent trends and policies," China Economic Review, Elsevier, vol. 22(4), pages 444-460.
    18. Giefer, Madeline M. & An, Li, 2022. "Divergent impacts of the grain to green program, landholdings, and demographic factors on livelihood diversification in rural China," World Development, Elsevier, vol. 156(C).
    19. Hao Li & Xiaohui Yang & Xiao Zhang & Yuyan Liu & Kebin Zhang, 2018. "Estimation of Rural Households’ Willingness to Accept Two PES Programs and Their Service Valuation in the Miyun Reservoir Catchment, China," Sustainability, MDPI, vol. 10(1), pages 1-19, January.
    20. Zhang, Qi & Wang, Ying & Tao, Shiqi & Bilsborrow, Richard E. & Qiu, Tong & Liu, Chong & Sannigrahi, Srikanta & Li, Qirui & Song, Conghe, 2020. "Divergent socioeconomic-ecological outcomes of China’s conversion of cropland to forest program in the subtropical mountainous area and the semi-arid Loess Plateau," Ecosystem Services, Elsevier, vol. 45(C).
    21. Liu, Zhen & Lan, Jing, 2015. "The Sloping Land Conversion Program in China: Effect on the Livelihood Diversification of Rural Households," World Development, Elsevier, vol. 70(C), pages 147-161.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:12:y:2020:i:4:p:1492-:d:321556. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.