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Forest loss, monetary compensation, and delayed re-planting: The effects of unpredictable land tenure in China

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  • Salant, Stephen W.
  • Yu, Xueying

Abstract

Over the past 65 years, forest tenure in China has oscillated unpredictably between private and village property regimes. This policy-induced uncertainty has distorted the harvesting decisions of individuals granted rights to grow trees and has lowered the value of China׳s forest output. We provide an analytical framework for assessing these effects quantitatively. Understanding the consequences of this policy-induced uncertainty is particularly important since China is currently engaged in an ambitious plan to increase its domestic supply of timber. To conduct this analysis, we extend the literature on forestry economics when there is a risk of loss due to forest fire or pests. We (1) take account of the possibility that replanting can only resume after an interval of uncertain length (with immediate replanting as a special Case); (2) investigate the effects of compensation for such losses based only on the net value of the stand of trees at the time of the loss; and (3) compare it to compensation that would leave the wealth and rotation decisions of the farmer unaffected by the presence of uncertainty.

Suggested Citation

  • Salant, Stephen W. & Yu, Xueying, 2016. "Forest loss, monetary compensation, and delayed re-planting: The effects of unpredictable land tenure in China," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 49-66.
    • Handle: RePEc:eee:jeeman:v:78:y:2016:i:c:p:49-66
    DOI: 10.1016/j.jeem.2016.02.004
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    Cited by:

    1. Gao, Li & Zhang, Wendong & Mei, Yingdan & Sam, Abdoul G. & Song, Yu & Jin, Shuqin, 2018. "Do farmers adopt fewer conservation practices on rented land? Evidence from straw retention in China," Land Use Policy, Elsevier, vol. 79(C), pages 609-621.
    2. Stephan Hoffmann & Dirk Jaeger & Wu Shuirong, 2018. "Adapting Chinese Forest Operations to Socio-Economic Developments: What is the Potential of Plantations for Strengthening Domestic Wood Supply?," Sustainability, MDPI, vol. 10(4), pages 1-19, April.
    3. Chen, Jiandong & Wu, Yinyin & Song, Malin & Zhu, Zunhong, 2017. "Stochastic frontier analysis of productive efficiency in China's Forestry Industry," Journal of Forest Economics, Elsevier, vol. 28(C), pages 87-95.
    4. Krul, Kees & Ho, Peter & Yang, Xiuyun, 2020. "Incentivizing household forest management in China's forest reform: Limitations to rights-based approaches in Southwest China," Forest Policy and Economics, Elsevier, vol. 111(C).
    5. Lin, Boqiang & Ge, Jiamin, 2021. "Does institutional freedom matter for global forest carbon sinks in the face of economic development disparity?," China Economic Review, Elsevier, vol. 65(C).
    6. Yiwen, Zhang & Kant, Shashi & Dong, Jiayun & Liu, Jinlong, 2020. "How communities restructured forest tenure throughout the top-down devolution reform: Using the case of Fujian, China," Forest Policy and Economics, Elsevier, vol. 119(C).

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    More about this item

    Keywords

    Forest tenure risk; Faustmann model; Optimal rotation period under uncertainty; Full compensation for loss;
    All these keywords.

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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