Encouraging investments in economic forests for revegetation will reduce cost-effectiveness of Chinese Sloping Land Conversion Program

Abstract

As China's largest ecological restoration program, the Sloping Land Conversion Program (SLCP) aims to improve vegetation coverage and mitigate soil erosion. The policy change of lifting the planting limitations on forest species and providing equal subsidies would encourage farmers to plant more economic forests than ecological forests in the new round of SLCP. However, these changes might lead to uncertainties in revegetation risks in the future because the cost-effectiveness of planting different forest species for revegetation remains unknown. Therefore, we are to evaluate the cost-effectiveness of planting economic and ecological forests in Shaanxi Province, China. Since the implementation of the SLCP, greening trends in Shaanxi Province have increased. It takes approximately four years after afforestation to maximize its ecological benefits. The main investment effect of ecological forests on revegetation is significant and positive; however, the investment return of economic forests is less pronounced. Furthermore, the remarkable crowding-out effect indicates that more economic forest investments would reduce the marginal contribution of ecological forest's to revegetation. Finally, all financial funds invested in ecological forests would bring maximum ecological returns. Hence, policy changes would result in risks of degraded vegetation and a decrease in the efficiency of fiscal investment. The government should be cautious regarding the forestry policy changes in the new round of the SLCP and encourage farmers to select appropriate forest species for afforestation aimed at ecological goals.