Time to adopt a context-specific and market-based compensation scheme for a new round of the Grain for Green Program

Abstract

With the imminent rollout of the latest round of China’s Grain for Green Program (GFGP), two primary questions remain to be addressed: Was the vegetation recovery achievement of the past two decades attributable to the program, or to climate change? How could a more flexible compensation scheme, that would improve the efficiency of the GFGP, be designed? Using China’s Loess Plateau region as a case study, we developed ordinary panel and panel threshold models to examine the effects of the GFGP on vegetation recovery, as well as the relationship between local economic growth and vegetation cover change, from 2002 to 2017. We found that a combination of climate warming and humidification contributed the most to vegetation recovery on the Loess Plateau, while the positive effect of the GFGP may be exaggerated. We also identified double thresholds in the effect of economic growth on vegetation change. As the relative contribution of the primary sector output to the local GDP decreased, the impact of economic growth on vegetation status changed from negative to positive, and the positive effect first increased and then decreased. These findings suggest that a new, more context-specific and market-based approach should replace the original ‘one-size-fits-all’ in the compensation scheme for the new round of the GFGP. Additional consideration should be given to contextual differences in local economic development, industrial structure, and the availability of alternative livelihood sources for the enrolled farmers.