1. Land Use Change in North West China Jeff Bennett

2. 1. China’s land and water resources  Area of 960 m hectares 40% grassland 17% forests 14% cropland 66% mountainous  Dry in the north and west  Wet in the south and east

3. 2. Resource degradation  38% of total land area “eroded”  50% of cropland “eroded”  34% of grassland moderately to severely degraded  27% of total area subject to desertification  10% of total area subject to salinisation

4. 3. Population and resources  22% of the world’s population on 7% of the world’s arable land  “Mismatch” of population with rainfall distribution  Growing urbanisation across formerly agricultural land  Pressure on resources … a cause of degradation

5. 3. Institutional factors  Grain self-sufficiency policy  Agricultural collectivisation – property rights  Industrialisation policy  State monopoly in agricultural commodity procurement and marketing

6.  Since Household Responsibility System (1978): Incomplete land tenure – use rights only Frequent enforced redistributions Ie Inadequate definition and defence of rights

7. 4. … the consequences  Reduced agricultural productivity  More natural disasters (flooding, dust storms, mud slides )  Diminished biodiversity  Rivers stop flowing  Air and water quality deterioration

8. 5. The policy response – “Grain for Green”  Convert cropland and “barren land” to forests and grassland to achieve water and soil conservation, but also agricultural restructuring and poverty reduction under the mantle of “sustainable development”  Inception in 1999  Payments of cash, grain and seedlings to farmers who convert land

9. 6. Adoption  25 provinces  1580 counties  15 million farmer households  Target: net increase in forest and grassland of 32 million hectares

10. 7. Features  150 kg/mu pa in the south  100 kg/mu pa in the north  20 yuan/mu pa in cash  50 yuan/mu worth of seedlings

11. 8. Terms  Benefits received over 2 years for grassland  5 years for “commercial forests”  8 years for “ecological forests”  Difference between commercial and ecological based on planting density  Use rights on converted land extended to 70 years

12. 9. … but is it sustainable?  Are the income streams available from the new land use patterns after the removal of the payments superior to the pre policy amounts? Price impacts of increased supply of tree products? Extent of off-farm income? Grain market responses?

13. 10. … and is it efficient?  What are the biophysical impacts of the project?  What value does the community have for those benefits?  Are the benefits being achieved at the lowest cost? Does the scheme target farmers with the highest net benefit of conversion? (low opportunity costs plus high environmental impact? Does the scheme provide perverse incentives (eg to “grow” subsidies not products)?

14. 11. The project  ACIAR funded collaboration between ANU and the China National Forest Economics Development Research Centre (part of the State Forestry Administration)  3 phases: Household survey to investigate financial impacts Broader benefit cost analysis integrating values of environmental impacts Institutional economic analysis of alternative policy settings

15. 12. Household survey  Conducted 4-28 June 2004  Involved 405 households in 15 villages across 4 counties in 2 Provinces (Shaanxi and Quinhai)  2064 people in the households  31% of respondents illiterate  75% males  74% Han, 19% Tibetan

16.  Over 14,000 mu of farm area involved (15 mu=1 ha)  17 mu per farm in Shaanxi  39 mu per farm in Quinghai  4800 mu converted to forestland  2700 mu converted to grassland  Area sown to crops decreased from 13,500 mu to 4,500 (about one third)

17.  Average cash payments (pa) Bin Xian – 47 Yuan An Sai – 340 Yuan Gong He – 565 Yuan Min He – 160 Yuan (A$1 = 6.5 Yuan)  Average grain subsidy (pa) Bin Xian – 425 jin An Sai – 3167 jin Gong He – 5670 jin Min He – 1640 jin (I jin = 500 gm)

18. 13. Before and after GFGP  Labour input 293 to 196 days per h’hold  Crop seed costs Y 530 to Y 334 per h’hold  Crop Output Shaanxi – down 70% Quinghai – down 17%  Off-farm income 213 people to 279 people Y 3074 to 3900 per person

19. 14. Work underway  Analysis of the household data to estimate impact on net income  Prediction of biophysical impacts of the policy Water quality and quantity Air quality

20. 15. Project information  Project web-site Downloadable papers Up dates on progress  http://apseg.anu.edu.au/sta ff/jb_suslndrr.php