The effect on forestation of the collective forest tenure reform in China

•The forest tenure reform past village forest land into individualized ownership.•We identify the causal effect of the reform by an Instrumental Variable estimator.•The IV is based on the countywide decision to offer the reform.•We find that forestation was tripled in the year of the reform.•We did not find significant change in timber harvest.

The Chinese government has allowed collective village forest land to pass into individualized ownership. The purpose was to alleviate rural poverty and stimulate investment in forests. Using data collected from 288 villages, in eight provinces, over three years, this paper measures the effect of the individualization on one aspect of forest investment, forestation. Because villages voted on the reform, we identify the causal effect of the reform by an instrumental variable estimator based on the countywide decision to offer the reform package. We find an increase in forestation of 7.68% of forest land in the year of the reform.