The Effect on Forestation of the Collective Forest Tenure Reform in China

Abstract

Aiming to alleviate rural poverty, stimulate investment in forests, and improve forest conservation, the Chinese government set forth a policy leading to small private holdings of previously village administered forest lands. Using data collected from 288 villages in eight provinces in three years, this paper measures the effect of the reform on forestation. Villages needed to vote for the privatization for the reform to be effective. To identify the causal effect of taking the reform, we use an IV estimator based on the county wide decision to offer the reform package. We find an increase in forestation of 7.9% of the forest land in the year of the reform.

Keywords: China, Forestation, Land Reform, Privatization

JEL Classification: 012, Q23