Basic Farmland Construction in China: A cost-effective investment for agricultural productivity and disaster resistance

Starting in 2006, China launched a project to carry out Basic Farmland Construction in 116 representative counties. The objective of this project was to enhance agricultural productivity. China invested 30 billion yuan in this project from 2006 to 2013. Using a difference-in-differences approach, this study estimates that Basic Farmland Construction increased per capita agricultural output by 6.3%, crop sown area by 5%, and agricultural mechanization by 7.3%. The total benefits of the project far exceeded the total investments. By incorporating with rainfall shocks, this study finds that the project could mitigate most of the damage from droughts and floods.