Trans-regional compensation mechanism under imbalanced land development: From the local government economic welfare perspective

Since 1990's China has issued a series of unbalanced land development policies for safeguarding food security and protecting farmland from overdevelopment, which brings about serious imbalanced development among regions. Thus initiating a trans-regional compensation mechanism to enhance balanced regional development is urgent. This paper attempts to shed the light on relationship between farmland protection and land finance from the perspective of local government economic welfare, and builds a trans-regional fiscal payment mechanism to balance farmland protection and economic development among provinces or autonomous regions or municipalities. Based on the data of China's second national land survey, a comprehensive level of farmland which takes the quantity, quality and ecological attributes of farmland into account, the relationship between farmland protection and land finance, and the trans-regional fiscal payment are quantified. The results indicate that (1) farmland protection for local government has a negative relationship with fiscal revenue accumulation, and an increase in per unit comprehensive value of farmland decreases about 11.474 Yuan (1.82USD) of per capita land revenue; (2) there are 17 farmland deficit regions mainly in East coastal China which should pay 26.1778 billion Yuan (4.14 billion USD) for overdevelopment and 14 farmland surplus agricultural dominant provinces mainly in Mid China which can gain a compensation of 35.0415 billion Yuan (5.54 billion USD) for underdevelopment (farmland protection). The study may contribute to the innovation of economic compensation policy of farmland preservation and reform of horizontal transfer fiscal payment.