Cost–Benefit Analysis of China’s Natural Forest Conservation Program

Abstract

Land degradation, soil erosion by water, and desertification caused by deforestation are serious problems around the world. To counteract the effects of these problems, China’s government implemented the world’s largest and most comprehensive ecological restoration program: the Natural Forest Conservation Program (NFCP). However, it’s not yet known how well the program has succeeded because no one has performed a comprehensive cost–benefit analysis. To provide the missing information, we developed an improved cost–benefit analysis approach that accounts for as many benefits and costs (including opportunity costs) as possible given the current availability of data. Our analysis revealed a net benefit of 6.029×1012 RMB per year for the NFCP. The net benefit (after subtracting the costs) was highest for protection of natural vegetation to allow recovery, but was lowest for afforestation by planting. We found significant differences between regions of China, suggesting that governments of these regions should adjust the balance among their ecological restoration measures to account for unique local conditions and maximize the net benefit. In addition, governments should increase subsidies to the residents of program areas to compensate them for the costs imposed on them by the NFCP.