Abstract:
The purpose of this paper is to examine the impact of land property rights integrity, subdivided into use rights, mortgage rights, and transfer rights, on household perceptions of long-term tenure security in China. To this end, we establish a theoretical framework that links China’s collective forest tenure reforms undertaken since 2003 to property rights integrity and two sources of tenure (in)security based on property rights theory: forestland reallocation and expropriation. Probit models are applied in the empirical analysis to household data collected in Jiangxi province in 2011 and 2013. The results indicate that household perceptions of tenure insecurity resulting from forestland reallocation expectations are affected by transfer rights, whereas household perceptions of insecurity resulting from forestland expropriation expectations are not affected by forestland rights. We thus suggest that it is crucial for policymakers to identify the sources of local property rights insecurity before they take steps to strengthen land tenure security. This paper contributes to the available literature on the relationship between property rights integrity and tenure security by identifying different sources of tenure insecurity, emphasizing the effect of property rights integrity on long-term tenure security, and taking into account the potential endogeneity problem.
Keywords: forest tenure reform; property rights integrity; tenure security; land reallocation; land expropriation
Introduction
Forests have increasingly been recognized as a critical element in economic development and ecological balances [1]. In the study of farmland tenure security, an abundance of literature has identified three effects that land tenure security may have on economic outcomes, i.e., investment effect, market effect, and credit effect [2,3,4]. The decentralization of forest management in some developing countries, for example, Vietnam, Ecuador, and China, has allowed similar research to be extended to the area of forest tenure. A number of studies have provided empirical evidence that forest tenure security stimulates household incentives to invest in forestland [5,6,7,8,9], transfers of forestland to more efficient uses through land markets [10,11], and rural household incomes [12,13,14]. Regarding the ecosystem, forest tenure security has been found to increase forestation [15,16].
Despite the importance of forest tenure security for both economic development and the environment, forest tenure is often insecure and/or ill-defined. This applies not only to China [17], but also to many of the world’s most biodiverse and forested regions [16]. Before the Rural Land Contracting Law, which was issued in 2003 and prohibited land reallocations, village leaders in rural China periodically reallocated collective (arable and forest) land among rural households within the same village to maintain an egalitarian distribution, eliminate growing inefficiency, and fulfill output quotas [18]. Besides, due to rapid urbanization, large pieces of forestland have been confiscated and converted into non-agricultural land in order to serve public and economic interests. Especially in the southern forestry regions where farmland is limited, forestland is the main type of expropriated land [19]. As a result, ill-defined property rights, forestland reallocations, and forestland expropriations have become major causes of tenure insecurity in China. In order to promote forestry development and achieve sustainable utilization of forest resources, a new round of collective forest tenure reform has been implemented since 2003 in China. One of its main purposes is to clarify the bundle of property rights to forestland contracted by rural households.
Land tenure security depends on many factors, including land tenure system, land characteristics, household characteristics, past and present land policies, cultural norms, and historical context [17]. Little research has been carried out on the potential contribution of property rights on tenure security in forestland. Exceptions are studies done by Holden et al. [17] and Yi et al. [7], which explored factors influencing tenure security through the bundle of rights approach. In this approach, a property rights index is used to represent the strength of the bundle of rights at the household level. Based on data from three provinces in 1980–2005, Holden et al. [17] concluded that local transfer rights enhance tenure security in China. Yi et al. [7] found that disaggregated rights, including the right to convert forestland to cropland, the right to select tree species, the right to use non-timber products, the right to abandon forestland, the right to transfer plots to other villagers, and the right to mortgage forestland, have significantly strengthened owners’ perceptions of tenure security and increased forestry investment.
Although the available studies provide some interesting insights into the impact of forest property rights on tenure security perceptions, there are several aspects that need more attention. First of all, these studies mainly examine households’ overall perceptions of land loss by asking whether the household expects to own the plot after five years. They do not distinguish between the risk of land loss arising from land reallocation for village self-governance purposes and the risk of land expropriation for the state’s public interests. Due to the strict protection policy of arable land and public interest forest in China, forestland expropriation is rising each year. Converted forestland has become a major source of construction land. For example, the area of forest being expropriated has risen from 19,073 ha in 2011 to 22,939 ha in 2012 [20,21]. Land reallocations induced by village self-governance mechanisms differ fundamentally from land expropriations through state interventions. Forest rights may therefore have different effects on these two sources of forest tenure insecurity. Secondly, the focus of the existing literature is mainly on the effect of forestland rights on short-term tenure security perceptions of farmers (for the coming five years). Since forest contract duration can be up to 70 years, medium to long-term property right security perceptions (e.g., the risk of either land reallocation or land expropriation over a longer period) may be more relevant for forest operation and management decisions. Thirdly, the available literature does not take into account the potential endogeneity caused by unobservable variables (e.g., households’ risk preferences) that may affect households’ awareness of their forestland rights as well as their perceptions of tenure security.
The objective of this paper is to examine the impact of forestland property rights on household perceptions of long-term forest tenure security in China. To achieve this, we distinguish between tenure (in)security related to the risk of forestland reallocation by village leaders, and tenure (in)security related to the risk of forestland expropriation either by the state or by local governments. Different tenure arrangements allocate different combinations of rights to a bundle [22]. We interpret forestland rights as a bundle of rights, that includes use rights, mortgage rights, and transfer rights, representing the integrity of forestland property rights. In the empirical analysis, probit models are applied to household data collected in Suichuan county and Fengcheng city (at the county level), Jiangxi province in 2011 and 2013. The selected regions are two of the pilot areas where the new round of forest tenure reform has been implemented since 2004. The reforms in Fengcheng and Suichuan focus on the decentralization of property rights to individual households and restrictions on forestland expropriation. These make the two regions suitable cases to examine the effects of property rights integrity on perceived household tenure security. Our main finding is that a household’s forestland reallocation expectation is affected by transfer rights, while a household’s perception of forestland expropriation is independent of forestland rights.
The outline of the paper is as follows. Section 2 provides a theoretical framework linking forest tenure reforms, affecting the bundle of forestland property rights, to households’ perceived tenure security. Section 3 briefly reviews the collective forest tenure reforms and their impacts on farmers’ forestland rights in China. Section 4 presents the materials and methods, including the research area, data collection process, model specification, and estimation strategy. Section 5 reports and interprets the estimation results and discusses the links between property rights, tenure security, and sustainable forest management. Section 6 presents concluding remarks.
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