Xu Ef D2 Tenure


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Xu Ef D2 Tenure

  1. 1. EfD 2nd Annual Meeting Collective Forest Tenure Reform in China: Outcomes and Analysis of Driving Forces Jintao Xu, EEPC Peking University November 5, 2008, Lake View Hotel
  2. 2. Forest Distribution in China
  3. 3. Main Forest Regions
  4. 4. Forest Sector in China <ul><li>Forest sector remains highly regulated </li></ul><ul><li>Control in logging, shipping, land use, etc. </li></ul><ul><li>Logging ban and </li></ul><ul><li>Lots of government programs </li></ul><ul><li>And….. </li></ul>
  5. 5. Forest Tenure in China <ul><li>Two ownership types </li></ul><ul><li>State </li></ul><ul><ul><li>~42% forest area and 68% volume; </li></ul></ul><ul><ul><li>Managed by state forest enterprises and farms </li></ul></ul><ul><li>Collective </li></ul><ul><ul><li>58% area and 32% volume </li></ul></ul><ul><ul><li>Growing share of timber production </li></ul></ul><ul><ul><li>Diversified management schemes </li></ul></ul>
  6. 6. History of Tenure Reform <ul><li>First Round: 1981-1986 </li></ul><ul><ul><li>A flucturating process </li></ul></ul><ul><ul><li>Different level of progresses among provinces </li></ul></ul><ul><ul><li>Tenure remains controversial Issue </li></ul></ul><ul><li>Second Round: 2000-, </li></ul><ul><ul><li>By 2007, 14 provinces anounced new reform policy </li></ul></ul><ul><ul><li>In July 2008, Central Government Reform Policy was declared, conclusion of the polciy change process promoting collective forest tenure reform </li></ul></ul>
  7. 7. What’s New? <ul><li>Continuation of efforts to expand and strengthen forest tenure rights for farmers </li></ul><ul><li>Village representative committee as decision maker on land redistribution plan </li></ul><ul><li>Longer term contracts (30,50,70) </li></ul><ul><li>Renewal of forest certificates (uniformed, GIS, etc.) </li></ul><ul><li>New rights: transfer, inheritance, collateral,etc. </li></ul>
  8. 8. Categorizing Forest Tenure <ul><li>Individual Household Management </li></ul><ul><ul><li>( Small Private Plots, Responsibility Hilly Land, Contracted, Rented, Planted and Occupied) </li></ul></ul><ul><li>Partnership </li></ul><ul><li>Villager Cluster, Natural Village </li></ul><ul><li>Outsider Contract </li></ul><ul><li>Collective Management </li></ul><ul><li>Ecological Reserve </li></ul>
  9. 9. The Survey Time Province County Town Village HH 2006.3-4 Fujian 12 36 72 720 2006.5 Jiangxi 5 15 30 300 2006.10-11 Zhejiang 6 18 36 360 2007.4 Anhui 5 15 30 300 2007.4 Hunan 5 15 30 300 2007.5-6 Liaoning 5 15 30 300 2007.5-6 Shandong 5 15 30 300 2007.8 Yunnan 6 12 30 600 Total 49 141 288 3180
  10. 10. The Change of Area Share by Tenure Type, 2000-2005(6)
  11. 11. Forest Area by Tenure Type (ha. Village Average)
  12. 12. Results 1 Timber Harvest Before and After by Village
  13. 13. Result 2 Afforestation Before and After by Village
  14. 14. Result 3 Change in Household Income Structure
  15. 15. So What? <ul><li>Is this social optimal? </li></ul>
  16. 16. Speculating on Reform Rationale <ul><li>In a collective system, land is so called “collective owned”. Ordinary farmers are de jure owner, but the leaders of the collective (administrative village) practice de facto decision making power. </li></ul><ul><li>The leaders are self interested. Without sufficient monitoring and sanctioning mechanism, the collective leaders will function in a way far from maximizing collective interests. </li></ul>
  17. 17. Failure of Collective Forest Management Fujian’s Trial as Example <ul><li>The size is large, if no management, easily tragedy of commons problem </li></ul><ul><li>When managed by village leaders, the voice of individual farmers gets smaller once the scale of collective operations gets larger. </li></ul><ul><li>Information asymmetry between farmers and leaders </li></ul><ul><li>Widespread corruption </li></ul><ul><li>Punishment cannot be used regularly because village leaders are backed by upper level government </li></ul><ul><li>Management efficiency is low and declining, so is the rent </li></ul><ul><li>Rising social conflict and farmer resentment </li></ul><ul><li>Rising cost of forest protection </li></ul>
  18. 18. Potential Benefit of Reform <ul><li>Hopefully, individualization solves the tragedy of commons problem (NTFP for example) </li></ul><ul><li>It reduces room for corruption </li></ul><ul><li>It provides incentives for individual farmers to invest in forest planting and re-planting--efficiency gain (1) </li></ul><ul><li>It creates forestland market so that scale economy might be achieved--efficiency gain (2) </li></ul><ul><li>Farmer can use forest certificate as collateral so that farmers ability to invest increases--efficiency gain (3) </li></ul><ul><li>And it is more equitable a system than the previous one </li></ul><ul><li>(revenue distribution, bargaining power for farmers, safety net, etc.) </li></ul><ul><li>Better prospect of sustainable development </li></ul><ul><li>Local Optimum </li></ul>
  19. 19. Potential Problems <ul><li>Forestland fragmentation, at least in near term—some efficiency loss </li></ul><ul><li>Credit market not developed so well, therefore lack of funding for investment—delayed efficiency gain </li></ul><ul><li>Social elites capture large area of forests and land--equity issue </li></ul><ul><li>Concerns about weak farmers losing land quickly—social stability and equity issues </li></ul><ul><li>Market volatility leading to deforestation, concerns about sustainability </li></ul><ul><li>Empirical Questions </li></ul>
  20. 20. Empirical Analysis of Farmer Collectives’ Choice <ul><li>The principle of reform (VRC, VA) allows testing the impacts of the following factors: </li></ul><ul><ul><li>Quality of Village Democracy </li></ul></ul><ul><ul><ul><li>Non-Benevolent Village Government </li></ul></ul></ul><ul><ul><ul><ul><li>Elite Capture (outsider contract) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Non-Independent Village Government (government interference) </li></ul></ul></ul></ul><ul><ul><ul><li>Rent Seeking-Efficiency Trade-off </li></ul></ul></ul><ul><ul><ul><ul><li>Low efficiency of management leading to wide spread financial deficit </li></ul></ul></ul></ul><ul><ul><ul><ul><li>In Fujian, most of the village council improved their financial situation after reform, by collecting fees and charging prices on forest land </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Opportunity cost of reform for village management important factor </li></ul></ul></ul></ul>
  21. 21. Empirical Analysis (cont’d) <ul><li>Institutional Risk (- household) </li></ul><ul><ul><li>Tenure insecurity </li></ul></ul><ul><ul><li>Government Intervention </li></ul></ul><ul><ul><ul><li>Logging quota </li></ul></ul></ul><ul><ul><ul><li>Eco-reserve </li></ul></ul></ul><ul><li>Social Capital (+ community) </li></ul><ul><li>Market Development (+ household) </li></ul><ul><li>Alternative Income (- household demand) </li></ul><ul><li>General Village Characteristics </li></ul>
  22. 22. Econometric Model <ul><li>Estimation of a system of tenure share change </li></ul><ul><li>Type(i, 2005)-Type (i, 2000)=f(6 categories of determinants, 2000) </li></ul><ul><li>i=1,2, …, 5. </li></ul><ul><li>The Sample: </li></ul><ul><ul><li>Fujian and Jiangxi </li></ul></ul><ul><ul><li>90 villages </li></ul></ul>
  23. 23. Tenure Change: Impacts of Driving Factors (2 Provs)(SUR)
  24. 24. Tenure Change: Impacts of Driving Factors (2 Provs)(Fractional Response)
  25. 25. Conclusion <ul><li>Government interference, tenure insecurity, tend to induce increase in group management (risk sharing), but reduce demand for individual tenure </li></ul><ul><li>The quality of village government matters </li></ul><ul><ul><li>Faireness </li></ul></ul><ul><ul><li>Rent Seeking-Efficiency Trade-off Seems to Exist </li></ul></ul><ul><li>Compensation for opportunity cost of collective leadership can facilitate reform. </li></ul><ul><li>Higher alternative income will reduce individual demand for forestland; </li></ul><ul><li>The Role of Social Capital?? </li></ul>
  26. 26. Implications on Regulations <ul><li>Precautionary </li></ul><ul><ul><li>Eco-Reserve set aside before current reform </li></ul></ul><ul><ul><li>30% area in collective forests, mostly uncompensated </li></ul></ul><ul><ul><li>75% area in key state forests </li></ul></ul><ul><li>Ongoing </li></ul><ul><ul><li>Relaxation of Logging Quota Control </li></ul></ul><ul><li>Future Efforts </li></ul><ul><ul><li>Management Plan to become formal regulatory tool </li></ul></ul><ul><ul><li>Regulation on land transfer seriously speculated </li></ul></ul>
  27. 27. Thank You!
  28. 28. Ongoing and Future Efforts <ul><li>Impacts of Forest Tenure Reform on Labor Market </li></ul><ul><li>On land market </li></ul><ul><li>Forest investment </li></ul><ul><li>On state forest reform </li></ul><ul><li>Follow-up surveys and assessment needed to obtain understanding of full results of forest tenure reform </li></ul>
  29. 29. Recent Tenure Reform Participation by Village
  30. 30. Contract Length by Tenure Type Type1:Individual HH Type2:Villager cluster Type3:Partner Type4:Outsider contract
  31. 31. Knowledge of Tenure Rights by Household
  32. 32. Source: Data for 1986 was from China Forestry Year Book (CFYB, 1987), China Forestry Publishing House. Data for 2000 was from the survey conducted in 2006. Household-Contracts in Fujian and Jiangxi, 1986 and 2000
  33. 33. Some Explanations <ul><li>Historical Background </li></ul><ul><ul><li>Private ownership 50 years ago </li></ul></ul><ul><ul><li>Similar to East European Countries </li></ul></ul><ul><ul><li>Human Capital: Farmer Individual entrepreneurship </li></ul></ul><ul><ul><li>While most developing countries are with history of colonial regime. State-ownership was dominant in natural resource sector and devolving down to community is already a big and difficult step </li></ul></ul><ul><li>Institutional Learning: success of agricultural reform </li></ul><ul><li>Equity issue: agricultural land tenure </li></ul><ul><li>Efficiency issue: failure of collective management </li></ul><ul><ul><li>Ineffectiveness of Income generation and forest conservation </li></ul></ul><ul><li>Political-economic factors: declining share of forestry in regional economy </li></ul>
  34. 34. Tenure Change: Impacts of Driving Factors (2 Provs)(SUR)
  35. 35. Motivating Empirical Analysis <ul><li>Strong disbelief still exists toward promises of forest tenure reform </li></ul><ul><li>(foresters, social elites, etc.) </li></ul><ul><li>In literature, “community forestry” seems to be the solution for developing countries </li></ul><ul><li>Outstanding examples: Mexico, India, Africa </li></ul><ul><li>China is moving toward individualized tenure system in all land. (ag, forest, grassland, even sea shore). Can this be successful? </li></ul><ul><li>And Why? </li></ul>
  36. 36. Forest Area by tenure type (ha. Household average)