One Cow, Two Gains: Welfare Improvement and Chemical Fertilizer Reduction from an Incentive-Based Cattle Support Program Among Poor Smallholders in Guangxi, China

Under binding resource constraints and rising environmental pressures, enabling poor smallholders to raise incomes while reducing chemical input use remains a key policy challenge in many developing economies. Drawing on two waves of household survey data from Guangxi, China, this study evaluates the impacts of small-scale beef cattle rearing promoted through an incentive-based subsidy scheme (Yijiang Daibu). Exploiting quasi-experimental variation in household participation, we combine Coarsened Exact Matching (CEM) with household fixed-effects models to address selection bias and time-invariant unobserved heterogeneity. The results show that participation in dispersed cattle rearing significantly increases household welfare (measured by per capita consumption expenditure) while simultaneously reducing chemical fertilizer application, indicating clear economic and environmental co-benefits. Mechanism evidence suggests that substituting cattle manure for chemical fertilizer plays a central role in driving fertilizer reduction. Moreover, access to credit, participation in farmer cooperatives, and internet access further reinforce both welfare gains and manure–fertilizer substitution effects. Overall, incentive-based support for small-scale livestock production, when aligned with local resource endowments, can deliver both welfare gains and greener production outcomes. This study provides micro-level evidence on how well-designed industrial support policies can jointly promote inclusive growth and agricultural sustainability in smallholder-dominated regions.