Abstract
This paper presents an empirical analysis of major drivers of land use change in China from 1988 to 2005. We compile a geographic information system database and develop a new method to estimate an econometric land use model that explicitly takes into account the spatial interactions between land use decisions. Results indicate that increasing urban land value was a major driver of farmland development, while rising rural income was a primary driver of conversion of farmland to forests and grassland. The growth of urban income and road density reduces grassland conversion but increases deforestation. (JEL Q15, R14)
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