Sustainable land use changes in the north west provinces of China under the conversion of cropland to forest and grassland program

Abstract

With increasing resource use pressure, land degradation in China has become increasingly severe in the past few decades especially in North West China. The Conversion of Cropland to Forest and Grassland Program (CCFGP), also known as the Grain for Green Program, was formally launched in 2002 to address the land degradation issue. Under the CCFGP, participating farmers are supported by the Government to grow trees and grass on land previously used for annual cropping. With government funding for the CCFGP drawing to an end in 2007, increasing attention amongst the Chinese policy makers, as well as the wider Chinese and international communities, has been devoted to the long-term sustainability of the land use changes triggered by the CCFGP. Question also remains as to whether there are better ways to deliver the anticipated policy outcome. In this thesis, a cost benefit analysis of the CCFGP is conducted to justify government intervention in providing the environmental goods and services through public finance. The potential efficiency gain of the Program is examined, based on which the sustainability of the land use changes under the Program together with the cost-effectiveness of the Program is explored. This partial cost benefit analysis of the CCFGP is conducted over a 20-year time period in the North West Provinces of China. Costs and benefits included in the analysis encompass the welfare impact of the land use changes on agricultural production and the environmental costs and benefits arising from the land use changes under the Program. Due to the limitation of data availability, some components of the environmental benefits and costs of runoff reductions are not included in the analysis. It has been found through this research that the livelihoods of participating farm households are improved by the CCFGP and the Program has positive impact on the social welfare of the local communities. The biophysical changes under the Program bring about both on-site and off-site benefits and costs. While the Program has been found to generate significant non-market environmental values, it also causes economic losses from reduced agricultural production arising from runoff reductions. Overall, the CCFGP improves the social welfare of people across Northern China over a 20-year time period since its implementation. Conclusion is drawn that government intervention through the CCFGP can be justified and the Program should be supported by the Chinese Government. Theoretically the sustainability of the Program can be achieved. However, sustainable land use changes will also depend on the implementation and design of the CCFGP. Future financing of the CCFGP is needed for some areas where the Program is found to decrease the social welfare of the local communities. Finally, there is room for better environmental targeting of the Program to improve the cost-effectiveness of the Program. The institution of an auction mechanism to allocate CCFGP funds more efficiently offers one potential solution.