Understanding grassland rental markets and their determinants in eastern inner Mongolia, PR China

•Around 43% sampled herder households are involved in grassland rental markets.•Imbalance in “people-grassland-livestock-productive assets” are the major determinants of market participation.•Livestock herd size encourages rent in while productive assets discourage rent out behaviors.•Educated (10 years) herders with higher Chinese level and more family labor available tend to expand their grazing.•Need to ensure adequate measures to implement grassland policies.

Grassland rental markets function as a venue for balancing production factors of herder households. This paper jointly determines the socioeconomic factors affecting herders' grassland rent-in and rent-out behaviors by applying Bivariate Probit Model with clustering standard errors on 422 households' data from Eastern Inner Mongolia. Results reveal that imbalances in “people-grassland (grass)-livestock-productive assets” are the major determinants of the herder households' participation in grassland rental markets. Given other factors, an increase of 10 thousand yuan in a household' productive assets renders an increase/decrease in their rent-in/rent-out participation likelihood by 1.0% and 2.0%, respectively; an increase of 100 standard sheep unit may bring about 4% increase in rent-in participation and 0.6% decrease in rent-out participation; an increase of 100 hm2 in hayfields may decrease and increase the likelihood of rent-in and rent-out participation by 13% and 3%, respectively; an increase of 1.0% in ratio of non-livestock income may decrease propensity of rent-in by 0.34%, and increase propensity of rent-out by 0.2%. In addition, the education and Chinese level of household head, and the available family labor encourage participation in grassland rent-in market. Main findings help facilitate better allocation of herders' livelihood assets by participating the functional grassland rental markets.