Post-reform Forestland Markets in China

Abstract

Land markets developed rapidly in China after agricultural land tenure reforms, but not after forest reforms. We surveyed farmers in three provinces to examine the post-reform forestland markets and options to strengthen them. Using household choice experiments, we estimate land market demand and supply under alternative contractual arrangements. Our findings are consistent with the currently thin markets but also suggest that alternative institutional and contractual conditions could support broader participation in land markets. Strengthening property rights on forestland emerges as an especially effective possible policy instrument. We illustrate its predicted effects on equilibrium rental rates and market participation. (JEL O13, Q23)