How forestland size affects household profits from timber harvests: A case-study in China’s Southern collective forest area

To improve the economies of scale in forest management and reduce the fragmentation of forestland, the Chinese central government has implemented a collective forest tenure supplementary reform since 2008. This has included a series of policies for motivating transfer of forestlands use rights among households in the country’s Southern Collective Forest Area (SCFA). However, to date there is little evidence that large-scale forest owners can earn more profits from timber harvests than small-scale forest owners in the SCFA. Using data collected from household surveys in the three of the SCFA’s provinces in 2016, this paper examines the return to scale of forestland ownership for timber harvests in this region, and how the scale of forestland ownership affects households’ profits from timber harvests. The results show a constant return to scale in timber harvests in the case provinces in China’s SCFA, that forestland area makes the most important contribution to the output of timber harvests, and that fragmentation of forestland results in lower profits from timber harvests. It appears that a moderate scale of forestland ownership should be identified for increasing the profits from timber harvests. With the rapid urbanization throughout China, an increase in off-farm employment among rural household members has a negative impact on timber harvests in the region. We argue that policymakers should realize the importance of encouraging the forestland transfers and improve the concentration of forestlands in the next stage of forest tenure rights reform in China’s SCFA.