Economic analysis of China’s grain for green policy: theory and evidence

First phase of the grain for green (GFG) policy, one of the China’s forest policies, was implemented in the late 1990s and ended in 2012. The first phase of the GFG policy was successful from a macro perspective, although there were some failures. Based on these outcomes, the second phase of the GFG policy was implemented from 2014 to 2020. This study used panel data to develop an empirical land use model and conduct a comparative static analysis focusing on the GFG policy. Results of the static analysis confirmed factors that affect GFG for the years 2002–2018. In addition, differences in the explanatory variables between the first (2002–2012) and second periods (2014–2018) were determined. Furthermore, differences in GFG subsidies between the northern and southern provinces in the first phase were analyzed for their effects on a reforestation area. The main results revealed that the amount of investment in GFG and rural livelihood security had a positive effect on the expansion of the area of GFG. In addition, the amount of investment in GFG was more effective during the second period than the first period.