Impact of the Sloping Land Conversion Program on rural household income: An integrated estimation

• We identified and quantified the direct and indirect influence pathways of the Sloping Land Conversion Program (SLCP) on rural household income.
• The direct effect of the SLCP on household income is positive but very small and insignificant.
• The SLCP has had much higher and increasing indirect impact on household income through promoting labor transfer and relaxing liquidity constraint.
• The SLCP's total impact on household income ranged from 3% in 2004 to 9% in 2010 excluding the insignificant direct impact.

The objective of this study is to identify the pathways of the potential impacts of the Sloping Land Conversion Program (SLCP) on household income and quantify these impacts along the identified pathways. We fulfill this objective by developing an integrated analytic framework and using data collected from Wuqi county of Shaanxi for the period 2004–2010. This integrated analytic framework enables us to formulate a structural equation model for testing hypotheses regarding the direct and indirect impacts of the SLCP. It is found that the direct effect of the SLCP on household income is positive but very small and insignificant, suggesting that retiring cropland has, at least, not reduced income from farming. Moreover, the SLCP has had a much higher and even increasing indirect impact on household income through promoting labor transfer and relaxing liquidity constraints. Overall, the SLCP's total impact on household income ranged from 3% in 2004 to 9% in 2010 excluding the insignificant direct impact. The research and policy implications of our work are discussed.