The effect of collective forestland tenure reform in China: Does land parcelization reduce forest management intensity?

China implemented a new round of collective forestland tenure reform during 2003–2013. In this reform, forestland owned by villages or township collective organizations were divided into a great number of small plots and allocated to member households of the collectives. A widespread concern about the reform is that parcelization of forestland might limit farmers’ incentives to invest in forest management. This paper examines the factors affecting farmers’ investment in forest management using household data collected in four provinces in 2010. The results show that the intensity of a household's investment in forest management is negatively affected by its nonfarm income and the average size of forest plots, but positively affected by the easiness in obtaining loan and the technical assistance the household receives. We argue that the counterintuitive effect of nonfarm income on investment intensity is due to the increasing marginal cost of own labor input. The effects of forest plot size and easiness in obtaining loan suggest that households have limited amount of capital to invest in forest management. Because of this constraint, parcelization of forestland resulted from the recent reform has not yet caused any reduction of the intensity of investment in forest management.