Property Rights, Village Political System, and Forestry Investment: Evidence from China’s Collective Forest Tenure Reform

Yang Ren,Shunbo Yao,Caixia Xue,Liu Yang,Anne Toppinen,Jari Kuuluvainen

doi:10.3390/f9090541

Abstract

To investigate the effect of improved property rights and, in particular, village democracy under China’s Collective Forest Tenure Reform (Tenure Reform) on household forestry investments, we estimate both tobit models and the more general Cragg models for farmers’ labor and monetary inputs into forestry, using survey data of 652 households from the southern collective forest region of China. The results reveal that the improved forestland use and disposition rights had a significant effect on household investments in forestry, while the beneficiary right did not. In addition, the results suggest that village democracy had a positive effect on households’ forestry investments. More importantly, we find that village democracy was able to significantly strengthen the investment incentive effect of the improved property rights under the Tenure Reform. These effects may be explained by the fact that village democracy improved households’ perception, cognition, and, subsequently, confidence toward, in particular, the use and disposition rights of the forests entitled to them. Therefore, the findings suggest that to increase the investment incentives of the Tenure Reform further, governments could strengthen the bundle of households’ use and disposition rights, as well as their related policies. Also, our findings indicate that governments could significantly improve the performance of public policies by effectively employing democratic procedures in the process of policy implementation.

Highlights

In China, the local agricultural and forest collectives own 62% of all the forests [1]
The purpose of the present study is to investigate the effect of improved property rights and, in particular, the effects of village democracy under the Tenure Reform on household forestry investments
The results indicate that the higher the level of the village democracy, the stronger the effect of property rights on the farmers’ investment incentives

Summary

Introduction

In China, the local agricultural and forest collectives own 62% of all the forests [1]. Since the founding of the People’s Republic of China in 1949, Chinese tenure institutions of forestland have experienced a series of fundamental changes [2]. The radical and frequent institutional reversals in property rights induced by these changes have severely dampened households’ forestry investment incentives [2,3]. Beginning in the late 1990s and continuing into the early twenty-first century, to motivate households to conduct forestry investments, the Chinese central government initiated a new round of collective forest tenure reforms (collectively referred to as Tenure Reform), including the. The main reform is about devolving the use right of collective forests by issuing households with legal certificates. After the main reform was Forests 2018, 9, 541; doi:10.3390/f9090541 www.mdpi.com/journal/forests

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Conclusion