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

Yuchen Gao,Zhidan Shi,Zehao Liu,Ruipeng Li

doi:10.3390/su12041492

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.

Highlights

As of 2019, China’s Returning Farmland to Forest Program (RFFP) had been in operation for 20 years
Areas with relatively developed economies undertake fewer RFFP responsibilities, whereas regions with disadvantages in economic development have taken on more contracts to convert croplands to forests
This is partly because relatively less agricultural land exists in developed areas and because these areas are mostly located in Eastern China, where the amount of cultivated land on slopes above 25 degrees is relatively low

Summary

Introduction

As of 2019, China’s Returning Farmland to Forest Program (RFFP) had been in operation for 20 years. After the cataclysmic floods that swept across the Yangtze region in 1998, the Chinese government rethought its environmental strategies and developed the RFFP to return farmland to forest and restrain heavy deforestation and forest degradation. This became an important scheme for post-disaster. The RFFP aims to protect and improve the ecological environment to gradually stop the cultivation of sloping farmland, which causes soil erosion, and complete afforestation using scientific methods to restore forest vegetation. The government compensates individual farmers who enroll in the program for their income reduction when ceasing to grow crops and returning their farmland to forest. The subsidy for afforestation is mainly used to purchase seedlings, whereas the subsidy for livelihood mainly compensates the farmers for the decrease in income caused by ceasing to cultivate crops [11]

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