China's sloping land conversion program: Institutional innovation or business as usual?

TL;DR: The Sloping Land Conversion Program (SLCP) as discussed by the authors is the largest land retirement/reforestation program in the developing world, having the goal of converting 14.67 million hectares of cropland to forests by 2010 (4.4 million of which is on land with slopes greater than 25°).

About: This article is published in Ecological Economics.The article was published on 2008-05-01 and is currently open access. It has received 466 citations till now. The article focuses on the topics: Technical support & Local community.

Summary

Introduction

• This research was funded by the Ford Foundation.
• This case study draws upon past research of the program during its pilot phase (1999-2001) as well as a 2003 household and village-level survey conducted by the Center for Chinese Agricultural Policy, CAS, to examine program design, implementation and outcomes to date.

1. Services and actors

• The SLCP was initiated by the central government in 1999 with the stated environmental goals of reducing water and soil erosion and increasing China’s forest cover and area by retiring steeply sloping and marginal lands from agricultural production.
• During the pilot phase, this goal was an explicit requirement of participation, so that farmers retiring cropland were also required to afforest a certain amount of wasteland, though this appears to have varied significantly by locale.
• Approach, starting with retirement quotas that are distributed from the central government to the provinces, followed by subsequent distribution down through counties, townships, and finally to participating villages.
• Program compliance is defined in terms of the quality, type and survival rates of the trees/grasses planted on the enrolled land, with survival rates being adjusted for regional conditions.

2. Implementation

• Under SLCP, the State Forestry Administration plans to convert around 14.67 million hectares of cropland, 4.4 million of which is estimated to be on land with slopes of 25 degrees or above (SFA, 2003; WWF, 2003).
• The pilot phase began with initial implementation in Shaanxi and Gansu provinces, located at the middle and upper 5.
• This project has been in effect for the past 20 or more years, and similar to SLCP involves the participation of rural households in a framework of integrated watershed management including afforestation/reforestation activities, small dam construction and terracing of land to reduce water erosion.
• In Sichuan, compensation standards fell below 1999 net income from enrolled plots for around 29% of participants in the sample, for a total shortfall of RMB 19,439, and in Shaanxi standards were below pre-program income for almost 7% of participants, comprising an average shortfall equal to almost 45% of average 1999 net household income for these households.

3. Additionality and baseline establishment:

• SLCP does indeed provide de facto additionality in terms of carbon sequestration, ecosystem services and timber supply, since without it farmers would not have retired the targeted cropland.
• The long-term extent of this is unclear, since it remains to be seen what share of afforested wasteland is viable in the long term and what share of retired cropland will be returned to cultivation after subsidies stop.
• As a rough gauge of this, Table 6 below looks at the responses of program participants in the 2003 survey to what they will most likely do after the subsidy period ends.
• Taken at face value, this suggests that around half of converted cropland will remain converted, which is troubling given the significant expenditures already made on the program, and since these results also suggest that potentially a fifth or more of cropland could be returned to cultivation upon subsidy period end.

4. Permanence, accounting and leakage:

• The only aspect of SLCP design that encourages permanence is the tax exempt status given to farmers on income earned from trees and grassland planted under the program.
• The short length of program subsidy periods likely more than offset any positive effects of this tax break.
• To date no research has examined whether or not, and to what degree leakage has occurred.

5. Differentiation:

• In general, SLCP has been designed with little substantive differentiation.
• Though participant opportunity cost and the provision of environmental services is somewhat implicit in the program’s emphasis on sloping and degraded cropland, subsidies do not change based on indicators of environmental services provided such as, for example, plot slope.
• Implementation to date, furthermore, brings into question the program’s stated regional focus on the important Yellow and Yangtze River basins, since by the end of 2003 SLCP was being implemented in over 2000 counties across 25 provinces.
• The degree to which targeting has raised administrative costs appears to depend crucially on local implementation.
• At the same time, however, such costs could likely be further reduced by allowing for greater autonomy on the part of households in choosing whether or not to participate.

6. Participation of disadvantaged groups:

• In the context of China, where the huge inequalities in land rural distribution seen elsewhere are practically nonexistent, targeting of small landholders has not been an issue in program design.
• Uchida et al. (2004) and Xu et al. (2005) also find little evidence in the 2003 survey that poorer households within the areas where SLCP is being implemented are being predominantly targeted.
• That said, program emphasis on remote regions with high proportions of sloping and degraded land implicitly targets the poorer rural households in China.
• It is likely too early to say what the long-term impact of the program will be on participants and rural households in the locales where SLCP is being implemented.
• It is unclear what side benefits, if any, have resulted from SLCP.

7. Next steps

• At present, the government appears to be committed towards continuing implementation and expanding enrolled area according to the 2003 plan.
• Overall, one of the most troubling aspects of SLCP is that, although on paper a PES scheme, in practice it appears to be just another top-down, campaign-style program with little input from local communities and households.
• In: Jintao Xu, Eugenia Katsigris and Thomas A. White , Implementing the Natural Forest Protection Program and the Sloping Land Conversion Program: Lessons and Policy Recommendations.
• Working Paper, Center for Chinese Agricultural Policy, CAS.

Figures

TABLE 4 Average Shortfalls in Grain and Cash Compensation in Surveyed Areas, 2002

Table 5 Farmer autonomy in SLCP participation (n=348)

Table 2: Average Survival Rate of Trees Planted Under SLCP (%), 2003 Survey.

TABLE 3 Participant 1999 Net Income from Enrolled Land Versus SLCP Compensation Standards

Table 1 SLCP Implementation in 2003 Survey Sample Villages

Table 6: Pariticipants' Viewpoints on their Post-SLCP Activities.

Frequently asked questions

Q1. What have the authors contributed in "China’s sloping land conversion program: institutional innovation or business as usual?" ?

This case study draws upon past research of the program during its pilot phase ( 1999-2001 ) as well as a 2003 household and village-level survey conducted by the Center for Chinese Agricultural Policy, CAS, to examine program design, implementation and outcomes to date. The authors arguing that SLCP needs to be redesigned to allow for greater choice on the part of rural households as to whether or not to participate, greater local innovation and input, and utilization of market-based mechanisms to improve cost effectiveness and reduce adverse outcomes. This case study of SLCP draws from past research of the program during the pilot phase ( 1999-2001 ), and uses a 2003 household and village-level survey conducted by the Center for Chinese Agricultural Policy, Chinese Academy of Sciences, to generally examine program design, implementation and outcomes. Xu et al. ( 2005 ) argue that the high grain subsidy that is part of program payments ( discussed later in the paper ) and the purchase of program grain from the State Grain Bureau ( SGB ) at RMB 0. 4/kg above market prices have been deliberately designed to aid the SGB, and by the end of 2003 has resulted in a 24. Workshop on “ Payments for Environmental Services ( PES ) – Methods and Design in Developing and Developed Countries. ” 5 approach, starting with retirement quotas that are distributed from the central government to the provinces, followed by subsequent distribution down through counties, townships, and finally to participating villages. However, case studies during the pilot phase also found that most villages and townships have preferred the easier-to-implement method of simply targeting all steeply sloping cropland in the township rather than conducting targeting based on the conditions of entire catchments, and that in some cases plots closer to roads were targeted to “ showcase ” implementation to higher-level authorities ( Zuo, 2001 ; Xu and Cao, 2001 ). The authors find significant problems in design and implementation in terms of the program ’ s predominantly top-down approach and lack of true conditionality, differentiation and mechanisms to ensure permanence. Furthermore, policymakers need to recognize that the long-term nature of the environmental services targeted by the program require significant extension of the subsidy lengths, which at present are at most 8 years. Data suggests that west China, with 70 % of the approximately 6. 07 million ha of agricultural land with slopes greater than 25 degrees, contributes the majority of this ( SFA, 2003 ; WWF, 2003 ). This, furthermore, could in part have facilitated fast expansion of the program after the pilot phase. Furthermore, survey results indicate that low survival rates have generally not resulted in the withholding of subsidies. The main reason for this, as Zuo ( 2001 ) and others have observed during the pilot phase, is the dual goals of environmental amelioration and poverty reduction, which place local leaders in the dilemma ; withholding subsidies based on low survival rates can significantly dampen enthusiasm for the program and potentially harm participant welfare, while delivery without adhering to some indicators of compliance encourages poor implementation. 

Q2. What is the main reason for the diversion of funds?

Anecdotal evidence also suggests that some diversion of funds has been due to rent-seeking opportunities implicit in program design. 

Q3. How many farmers have entered the SLCP program in the first four years?

Fifteen million farmers have entered the program in just the first four years, and leaders have estimated that upon completion it will affect 40-60 million rural households (Uchida et al., 2004; Xu et al., 2004). 

Q4. How many hectares of cropland had been converted?

By the end of the pilot, SLCP was being implemented 27,000 villages within 400 counties across 20 provinces, and a total of 1.2 million hectares of cropland had been converted and 0.47 million hectares of barren land (Xu et al. 

Q5. What does Xu et al. (2005) find?

Xu et al. (2005) finds, however, that plot slope and land quality have been important factors in the targeting of plots, and that larger plots are preferentially chosen for retirement. 

Q6. How many households felt they could choose to participate in the SLCP program?

only around 53% of surveyed households felt that they could choose whether or not to participate (61.7% of the participants and only 25.9% of non-participants). 

Q7. How much is the average compensation per hectare in the SLCP basins?

In monetary terms compensation per hectare in the Yellow River and Yangtze River basins are around 1.9 times and 2.7 times, respectively, average rental payments of the US Conservation Reserve Program, which Heimlich (2003) estimates for 2000 to be US$45.62/acre/year.of RMB 13,139, or an average at the household level of roughly 4% of 1999 net income. 

Q8. How many households were able to choose which areas to retire?

And only 34.5% and 29.9% of participant households felt that they could choose which areas and which plots, respectively, to retire. 

Q9. What is the degree of contextuality of the program plan?

Since the program plan makes significant allowances for diversity in local implementation, the degree to which compliance and outcomes are linked appears to be strongly contextual. 

Q10. How many requests have been received from local governments asking for higher land conversion quotas?

To date, the State Forestry Administration continues to receive numerous requests from local governments asking for higher land conversion quotas. 

Q11. How much of the convertedcropland will remain converted?

Taken at face value, this suggests that around half of convertedcropland will remain converted, which is troubling given the significant expenditures already made on the program, and since these results also suggest that potentially a fifth or more of cropland could be returned to cultivation upon subsidy period end. 

Q12. How many households received less than pre-program net revenue?

Xu and Rozelle (2004) find in that around 24% and 77% of their sample households in Ningxia and Guizhou provinces, respectively, received payments less than pre-program net revenue from the plots. 

Q13. How many hectares of cropland will be converted?

[Table 2]Under SLCP, the State Forestry Administration plans to convert around 14.67 million hectares of cropland, 4.4 million of which is estimated to be on land with slopes of 25 degrees or above (SFA, 2003; WWF, 2003). 

Q14. How many counties are currently under SLCP?

Implementation to date, furthermore, brings into question the program’s stated regional focus on the important Yellow and Yangtze River basins, since by the end of 2003 SLCP was being implemented in over 2000 counties across 25 provinces.