Property rights, tenure security and forest investment incentives: evidence from China's Collective Forest Tenure Reform

Yuanyuan Yi, Gunnar Köhlin and Jintao Xu

Environment and Development Economics, 2014, vol. 19, issue 1, 48-73

Abstract: This paper assesses how tenure reform in China's collective forest sector affects Chinese farmer households’ perception of tenure security and propensity to invest in their forestland. A large database consisting of information from 3,180 households in eight provinces from south to north is used to explore factors correlated with more strongly perceived tenure security and determinants of forest-related investment. The study adds to the limited research testing whether there is endogenous causality between investment and tenure security in forestland, and finds that investment was not undertaken to enhance tenure security. In addition, the data allow for differentiation between perceived tenure security and contracted use and transferability rights. Overall, stronger contracted rights were found to affect investment. China's forest tenure reform – where individual households can manage forestland, empowered by legal certification and stronger contract rights – has thus enhanced tenure security and encouraged forest investment.

Date: 2014
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