Water conservation policy and agricultural economic growth: Evidence of grain to green project in China

Abstract

The relations between soil and water conservation policies and agricultural economic growth in the planned economy system have not been thoroughly discussed in the past literature. This study used a case study of the grain to green project (GTGP) in China and land rent theory to set up the following assumptions: (1) the locations and areas of farmland and forestland are controlled by the government's planned economy system; (2) the farmer's direct income is defined by subsidies from its farmland-converting area in GTGP; and (3) the farmer's indirect agricultural income risk reduction is affected by soil and water conservation from its farmland-converting area in GTGP. Based on a literature review and survey of experts, this study established comparative static economic graphs of the impacts on farmland and forestland areas by the different shifts in land rents brought about by agricultural and non-agricultural economic growth in China. These graphs were then modified to illustrate the impact of GTGP on farmland and forestland areas. To explore GTGP's dynamic economic impacts on farmland and forestland areas, this study constructed a dynamic model of farmland area converting behavior in GTGP. According to the results of this model, the forestland area in GTGP might increase in the short term, whereas the overall farmland and forestland areas may continue to decrease in the long term. The incentives of GTGP should include the education and promotion of soil and water conservation.