Heterogeneous choice in WTP and WTA for renting land use rights in rural china: Choice experiments from the field

Abstract

China's institutional structures regarding land are unique and complex. Recent changes to the land laws now permit farmers to rent Land Use Rights (LUR) from other farmers. The purpose of this paper was to make some determination about the value of certain attributes important in determining the willingness of farmland tenants to pay agricultural rents, and the willingness of owners of land use rights accept a rental price.We use in-the-field discrete choice experiments (DCE) in Shandong, Sichuan, Shaanxi, Jiangsu and Hunan across two waves in 2018 to identify the WTP and WTA attributes for both landlords and tenants. Our underlying hypothesis was that landlords and tenants will likely place different utility weights on attributes of land because their interest between making and receiving a payment are different. This is confirmed in this study. We find little uniformity in WTP and WTA across provinces. Mixed Logit results confirm that not all Chinese farmers think alike and are heterogenous in how they weigh or value attributes. Overall, we find autarky land rental prices of 813.93RMB, 564.65 RMB, 1,193.96 RMB and 863.99 RMB for Shaanxi, Shandong, and Sichuan which are well within the observed range. We observe a fairly wide range of WTP and WTA values across provinces which reflect the individual characteristics of the growing regions surveyed. We also find generally that the WTP for attributes are higher than WTA. These are reflected by utility-rent elasticities which reveals that heWTP is more elastic than WTA. We conjecture that differences in WTP and WTA is attributed to certainty equivalent risk transfers and untethered access by farmers to the wage market.