Who Walks in the Shadows? Revealing the Blind Spots of the Natural Forest Protection Programme in China

It is often conjectured that conservation policies for state-owned forests not only influence the state employees managing these forests, but the indigenous residents living in state forest regions as well. This research explored this conjecture by conducting a case study of the Natural Forest Protection Programme (NFPP) in China. A theoretical model was developed to describe the mechanism as to how NFPP impacts indigenous residents through influencing their labor allocation decisions. The theoretical predictions were then examined through empirical analyses based on household level micro-data collected from Gansu and Yunnan provinces in Western China. The analyses used alternative indicators of the NFPP intensity and rigorous econometric methods that controlled for potential selection and endogeneity issues in order to generate reasonable causality inferences. Both the theoretical predictions and empirical results found that NFPP negatively affects the total income of indigenous residents. Scrutiny into the variations of income components revealed that indigenous residents seem to be intensifying agricultural production activities, which implies that NFPP may have caused environmental leakage effects by shifting the environmental pressure from forests to cropland. These factors should be considered when designing prospective state forest reforms in the Western regions of China.