Land Tenure Reforms and Land Conservation Investments in China ¨C What Does Real Option Value Theory Tell Us?

Xianlei Ma (), Justus Wesseler, Nico Heerink and Futian Qu ()
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Xianlei Ma: Public Administration College, Nanjing Agricultural University, CHINA
Futian Qu: Public Administration College, Nanjing Agricultural University, CHINA

Review of Economics & Finance, 2013, vol. 3, 19-33

Abstract: Land conservation investments can make an important contribution to avoidance and mitigation of land degradation. Lack of tenure security and land transferability may, however, limit the extent to which farmers undertake such investments. Using real option value theory, this paper investigates the expected impact of the market-oriented tenure reforms in China since 1998 on land conservation investment incentives. It postulates that the reforms are more likely to elicit land conservation investments in areas where land markets are developing. This paper further argues benefits of the land tenure reforms will be underestimated if only the intrinsic but not the time value of changes in the investment incentives will be considered. The findings obtained from this research provide a better understanding of the relationship between the land tenure reforms and land conservation investments, and are likely to serve sustainable land management in China and elsewhere.

Keywords: Property rights; Land tenure; Land conservation investment; Real options; China (search for similar items in EconPapers)
JEL-codes: D13 K11 Q15 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

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